The latest Australian Bureau of Statistics (ABS) data shows that new lending in South Australia is at record levels as South Australian Senators look set to be the vital votes to save safe lending laws.
"Home lending is booming in South Australia. We haven't seen such startling levels of lending since records began in 2003," says CHOICE CEO Alan Kirkland.
The ABS figures show:
- Lending for new South Australian owner-occupier loans is at the highest level since records began in 2003. Lending for new homes is 41% higher than in April 2020.
- Lending for South Australian first home buyers in April 2021 is 48% higher than April 2020.
- New lending for investor housing has increased 41% since April 2020.
"The general signs of economic recovery mask the strong risks for borrowers in a booming housing market. The state faces the perfect storm of rising levels of household debt, ultra-cheap credit, flatlining wages, hidden underemployment and key government support tapering off."
"Housing unaffordability is also reaching a crisis point in South Australia. Median house prices in Adelaide have ticked over half a million dollars. Families are having to take on increasingly larger debts to simply enter the market," says Mr Kirkland.
The ABS data comes as the government struggles to garner enough support in the Senate to axe safe lending laws. The laws were put in place in 2009 after the Global Financial Crisis to prevent reckless lending observed in the lead up and during the crisis. The legislation has been slammed by key crossbench Senators, including Senator Jacqui Lambie and Senator Pauline Hanson.
"Safe lending laws are a critical consumer protection to ensure that banks do not lend recklessly to Australians. Now more than ever, when credit is cheap and home lending is booming, we need strong safe lending laws to ensure banks don't sell people into loans they won't be able to afford down the track."
"The Banking Royal Commission heard shocking stories of banks lending money to people who the lender knew would never be able to repay the loan, including people with disabilities, pensioners, and problem gamblers. If safe lending laws are axed, there won't be any penalties for this kind of behaviour. Banks won't be fined, and they won't have to pay compensation."
"Rebekha Sharkie from Centre Alliance spoke out against the government's changes in the lower house, and independent Senator Rex Patrick has expressed strong concerns. We encourage Senators Stirling Griff and Rex Patrick to continue to stand up to the banks and government, and vote down the government's changes when they hit the Senate."
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Over 37,000 people and 125 community sector organisations, including CHOICE, Anglicare SA, Uniting Communities and the Consumer Credit Law Centre of South Australia have written an open letter calling on parliamentarians to save safe lending laws.
Read more: www.choice.com.au/safelending