Bank Leaders from Australia’s biggest banks and home loan lenders have blamed both sides of politics for being lazy and ignoring the national housing affordability crisis.
Ralph Norris, chief executive of the Commonwealth Bank, and Aussie Home Loans founder John Symonds, said the problem of not being able to afford a home was becoming worse for many consumers.
The issue has been seized by both major parties and will be a key platform of the election campaign later this year.
Labor has pledged $500 million to establish a cash grants fund for local councils to take $20,000 off the cost of housing and also vowed to review affordability each year.
Treasurer Peter Costello has ordered a land audit to examine property pricing movements.
The Coalition and the Reserve Bank have pointed the blame for the housing price blowout at state governments for not releasing more greenfield land.
Mr Symonds said there were worrying social ramifications of families being unable to afford to buy into the property market.
“There’s Band-Aid initiatives, and they are just Band-Aids,” he said. “I think this is a larger problem than what is being spoken about. There’s a social issue, not just a financial issue.
“Upping the housing grants, curbing stamp duty isn’t fixing the problem – I think government inaction at both state and federal level has a lot of answering to do.”
The Coalition’s land audit, which starts later this year, has been described as a reaction to Labor’s policy. “I have not seen or heard of any real sustainable initiatives that have come out of Labor’s summit or anywhere else,” Mr Symonds said.
Mr Norris said the housing affordability crisis was part of a broader problem – a lack of infrastructure investment across Australia. “I think it’s a supply and demand situation, there are supply-side constraints which are related to planning issues,” Mr Norris said.
The vulnerability of households to shifts in the interest rate has never been greater, as household debt is at record levels.
Mr Symonds said the current lending standards of the banks had been eased, as the majors battle for market share.
“Credit has become very easy and free to get,” he said. “You have to be pretty hopeless today not to stack up for a loan. It’s catching up in terms of borrowing, over-commitment. The perception and fear of interest rates today is so much grater than five to 10 years ago because of the amount of consumer debt.”
The RBA is examining the impact of the sub-prime fallout on the Australian mortgage market ahead of its meeting next week. The board members will receive briefing notes this afternoon, ahead of the Tuesday morning deliberations.
The prospect of a rate rise is now almost certain, despite the equity and credit-market shakeups around the world.
The futures market was last night pricing the chance of a shift in the cash rate at 74 per cent.
Source: The Australian
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About: Rick: Rick Adlam has been involved in mortgage finance since 1996 with Equity Home Loans as a Founding Partner. Rick created Mr Mortgage™ in 1999, one of Australia's first online mortgage brokers. As a mortgage introducer Rick specializes in helping his clients get approved for low interest mortgage loans with no ongoing fees and charges, and low doc home loans for the self employed.
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About the Author
Rick Adlam Has Written 139 Articles For Us!
Rick Adlam has been involved in mortgage finance since 1996 with Equity Home Loans as a Founding Partner. Rick created Mr Mortgage™ in 1999, one of Australia's first online mortgage brokers. As a mortgage introducer Rick specializes in helping his clients get approved for low interest mortgage loans with no ongoing fees and charges, and low doc home loans for the self employed.
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