IMF predicts home loan drought

Monday 10 August 2009

Article by Mozo

Australians looking to compare low interest home loans might be interested in the latest report from the International Monetary Fund (IMF).

The body has gone against the prediction of the Reserve Bank of Australia (RBA), suggesting credit availability may soon be tightened if house prices fall rapidly.

Such situations have been seen in other nations, but Australia has weathered the changes so far.

The IMF explained: "A sharper than expected deterioration in banks’ asset quality – possibly stemming from lower house prices – could constrain credit and deepen the downturn."

It stated current house prices could be overvalued to the tune of around 15 per cent, adding it expects the economy to contract by 0.5 per cent during 2009 – a one per cent difference from the RBA’s 0.5 per cent growth prediction.

However, it did state the larger banks were in a position to cope should anything affect their home loan portfolios.

Meanwhile, an employee for a well-known lender has been relieved of her duty after keying in $10 million to a computer when a customer asked for an overdraft of $100,000.

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