New credit laws 'could cut down on lending'
Australian financial institutions may be reluctant to lend smaller sums to consumers under new credit laws, it has been suggested.
An editorial in the Townsville Bulletin notes that new laws brought in this week as part of the National Consumer Protection Package will require lenders to take greater steps to ensure their customers are able to repay loans and meet lending costs.
It argued that while the measures had generally been acknowledged as being beneficial for consumers, the imposition of more stringent disclosure requirements would make lenders more reluctant to look into certain credit applications.
"There are concerns it will make large institutions loath to lend small sums due to the additional workload it imposes," said the Townsville Bulletin.
"The package requires finance providers to secure greater certainty as to capacity to pay off a loan, prompting lenders to make changes to credit policies, including imposing a larger buffer between a borrower's earnings and expenses and their loan obligation."
Consumers concerned about their current borrowing position can choose to compare credit cards in search of the best deals. Earlier this week, the Illawarra Mercury reported that banks are preparing for a surge in customers with debt problems after the Christmas period.
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