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CANBERRA - The dark side of Australia's golden years is being hauled into the light as debt begins to overwhelm the nation's struggling mortgage belt.
While the Reserve Bank yesterday resisted a further rise in interest rates, the pain of eight successive increases in the official cash rate, plus others imposed separately by major banks, is pushing tens of thousands of families to the brink.
Their plight is being reflected in household budgets pared so close to the bone for some that meals are being skipped to keep up with mortgage repayments, and, for the less fortunate, rising rates of repossessions and distress sales.
A survey by Swinburne University's Australian Housing and Urban Research Institute estimated that as many as 300,000 households were in danger of financial collapse because of rising interest rates, a slowdown in the economy, or the loss of overtime or second jobs.
Consumer and financial counselling services have also warned that additional debt encouraged by Australia's long run of boom years was now coming home to roost through overstretched credit cards and buy now, pay later offers by large retail chains.
Increasing mortgage and credit repayments have been matched by soaring costs of petrol and food: as the Senate yesterday opened an inquiry into housing affordability, the Australian Competition and Consumer Commission began a probe into grocery prices.
And new allegations have been levelled against banks and other major lenders by the Finance Sector Union, which said almost 60 per cent of bank workers claimed to have been pressured by their bosses into talking customers into loans they couldn't afford.
A union report said bank staff were subject to sales targets for loans, which were increasingly linked to their pay and job security.
"Bank and finance company sales targets are locked away in secret vaults, with customers unaware that bank workers have to meet targets, including selling of debt products," union national policy director Rod Masson said. Despite increasing interest rates, banks are not passing on any relief to customers by reducing pressures on bank workers to sell credit cards, personal loans or mortgages.
Australian Bankers Association chief executive David Bell denied the claim, telling ABC radio that loans were extended only to people who could afford them, and that the problem lay with non-bank lenders.
"Unfortunately there are other lenders out there, the bottom-feeders, who lend to people not really caring if they can repay that money," he said.
But the union's allegations have come after an alarming investigation of household debt by the ABC TV programme Four Corners, which accused financial institutions of excessive lending on mortgages, credit cards and "over-the-horizon, interest-free" deals.
The programme included allegations by former bank officers of policies requiring staff to talk customers into large loans regardless of their ability to service them, of relaxed eligibility criteria, and of margins allowing interest rate rises of about 2 per cent despite increases of more than 3 per cent in the past five years.
"The level of debt is exploding to a level that's going to cause a crisis in our community," Garry Rothman, of the Uniting Church's community service organisation Uniting Care, told Four Corners.
One family interviewed had repayments on two mortgages totalling A$5000 a month and lost their home.
A young father of four had been given five personal loans totalling more than A$100,000 on an income of A$48,000 a year. His income had fallen to A$36,000 and he was now bankrupt.
The Real Estate Institute of Australia says the proportion of family income needed to meet average home loan repayments rose to 37.4 per cent in the December quarter last year, the highest level in the 22 years the institute has been recording the figures.
The University of Swinburne confirmed the pressure.
"What we found was that almost 50 per cent of all households were relying on either overtime or a second job of the main income earner to sustain the mortgage," Professor Terry Burke told Four Corners.
A new coalition of union, consumer, housing, and community service organisations has now called on the Government to place new benchmarks and controls on lenders.
"Australia is facing the worst housing affordability crisis on record," it said.
"Household debt has grown at unsustainable levels and as a consequence increases in interest rates and the cost of living are placing extraordinary hardship on a new group of Australians ... the working poor."
UNDER PRESSURE & OVER STRETCHED
* As many as 300,000 households in danger of financial collapse because of rising interest rates, a slowdown in the economy, or the loss of overtime or second jobs
* Overloaded credit cards and buy now, pay later offers by large retail chains
* Multiple loans, mortgages
* Soaring costs of petrol and food