Banks scorned as consumers embark on debt binge

Friday 05 June 2009

Article by Mozo

Australian banks are being urged to remember the causes of the financial crisis as they open up their home loan and credit card lending practices.

Consumer Action Law Centre director Nicole Rich told the Herald Sun that although many banks closed their door to customers on an unsound financial footing in the immediate wake of the financial crisis, many are becoming worryingly liberal in their current credit card, home loan and geared investment lending strategies.

She warned that the low interest rates seen in recent months may exacerbate problems for debt-laden Aussies in the future.

Ms Rich explained: "The risk is when rates stop being really low they won’t be able to afford the repayments. It is lender conduct that is contributing most to this. Lenders are encouraging us to borrow."

The Reserve Bank this week decided to keep interest rates on hold, but many analysts expect that they will cut again in the coming months.

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