Economist says home loan debt crisis unfounded

Thursday 11 June 2009

Article by Mozo

Fears that rising home loan and personal debt will spiral out of control are broadly unfounded, claims Professor Wooden, deputy director of the Melbourne Institute of Applied Economic and Social Research.

Speaking at a public forum on Wednesday (June 10th), the professor said that most Aussies have adopted a prudent approach to taking on home loan and credit card debt.

"While aggregate data on household debt in Australia may appear alarming, our analysis of … individual households show that relatively few households were carrying unsustainably high levels of debt in 2006," he explained.

As such, he expressed confidence that the country’s debt burden will remain manageable unless the unemployment rate soars.

Despite his positive outlook, many home loan lenders have come under fire this week, with Katherine Lane, principal solicitor at the Consumer Credit Legal Centre, slamming the big banks for slapping heavy fines on those who fall behind with their mortgage payments.

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