Tasmania, once the envy of other states for being one of the most affordable places to live, has become a place where young people and locals can struggle to afford to live near their job and community. The housing market has winners and losers, but there's one group you can be sure will do well from a lending spree.
As the country plays a vicious game of Monopoly – driving up house prices and rents in Tasmania – too many Tasmanians are doing it tough.
Tassie households feeling the strain
Tasmania has the highest rate of mortgage stress across the country. As at November, more than 53% of Tasmanian households with a mortgage were officially in mortgage stress and the story for renters isn't much better. At times, Hobart's median rent has close to matched Melbourne's – one of the most expensive cities in the world to rent.
When people are struggling to make ends meet, that's when financial predators strike. It's been two years since the banking royal commission released its final report, and what it found was shocking: big banks and finance companies ripping off desperate Australians to the tune of billions of dollars, putting stress on families and homes on the line.
Safe lending laws protect communities
Australia has safe lending laws that are intended to stop the worst from happening. The banking royal commission found these laws are vital to protect the community from big bank greed. It also said that they need to be better enforced.
The banking royal commission found these laws are vital to protect the community from big bank greed
That's why we're so shocked that the federal government is proceeding with plans to scrap these laws. For a state dealing with such high levels of mortgage stress, scrapping safe lending laws is a recipe for disaster for Tasmania, putting people at risk of even more financial pressure.
Thousands of Australians have joined CHOICE's open letter to save safe lending laws, with Tasmanians sharing stories of bad bank behaviour going back decades. Aggressive lending from banks leaves people picking up the pieces many years later.
Doing it tough
Matthew from Hobart told us how "many years ago... I went bankrupt from credit card debt. At that time the banks were sending me unsolicited, pre-approved credit cards mailed directly to my house – and I was using them up to their limits. I was also under-employed and eventually I just couldn't service the debt plus interest."
The banks were sending me unsolicited, pre-approved credit cards… I just couldn't service the debt plus interestMatthew from Hobart
Barbara from Hobart saw the worst of the global financial crisis, telling us "my career ended with the 2008 financial crisis which had its basis in the unsafe lending that was happening in the US and here in Australia. Let's not go through that again."
As Australia slowly emerges from the COVID-19 pandemic, the Tasmanian economy and community can't keep living under the severe mortgage stress that affects so many people now.
Tasmanians deserve better
Tasmanians deserve affordable homes, fair loans and protection from the worst impulses of the people who caused the global financial crisis and sparked the banking royal commission. If the federal government scraps safe lending laws, we'll see more Tasmanians driven to the brink, more exploitation from big banks and a slower economic recovery from COVID-19.
Alan Kirkland is CEO of consumer advocacy group CHOICE. A version of this article was originally published in The Mercury on 16 February 2021.