NAB report finds 2.4 million Australians financially vulnerable
The Australian 12:00am September 16, 2017
Michael Roddan
Consumers made vulnerable and financially ruined by the Banks and still bankers continue selling Toxic INTEREST ONLY Loans to the poorest of people. There is no enforcement of law so predatory lending continues.
More Australians are financially vulnerable with meagre savings, according to a new National Australia Bank report.
The report, written by a team of researchers from the Centre for Social Impact in partnership with NAB, came as Australia’s largest mortgage insurance company Genworth warned more borrowers were using credit card debt and “cross-collateralising” house deposits with their parents, which could exacerbate risks in the housing market in an economic crisis.
Despite the Reserve Bank this week claiming borrowers were better placed to pay off a mortgage as they had a proven track record of financial responsibility in saving for larger deposits, Genworth chief executive Georgette Nicholas said more borrowers were turning to “unsecured debt” as tougher rules forced lenders to require larger deposits.
“It’s been an increasing phenomenon, that we’ve seen over the last two or three years,” Ms Nicholas said.
“You’ve seen people coming up with that 20 per cent deposit through credit cards or some type of unsecured loan, or using cross-collateralisation such as parental guarantees,” she said.
“All of that creates additional risk in the system. If you had a stress event and the parent had to come up with their portion of the loan for the child they guaranteed, they’ll probably have to sell their house. That puts two properties on the market instead of one.”
According to the Centre for Social Impact, high levels of income inequality, household debt and the cost of living outstripping rates of inflation has increased the number of financially vulnerable Australians to 2. 4 million. The team found the number of Australians who were financially secure was down to 31.2 per cent of the population.