Bad Credit Loans, Bad Credit Home Loans – Bad Credit Finance Australia

Aussie borrowers have taken on $86.3 billion more debt in the past year, but current research reveals Australians are attempting to gain some control of their debts by using savings to pay down credit cards and personal loans as well as mortgages.

People would rather pay out current debts before putting any savings together. This certainly makes sense.

According to data provided by the RBA, Australian consumers have paid out $20.5 billion off their credit card balances in June 2010.

The ING Direct index found 48 per cent of homeowners making extra repayments on their mortgage, and 3 per cent struggling to meet repayments.

Currently Australia’s median mortgage balance is $175,509, down from $177,259 in the first three months of 2010. The median card debt per Australian household has gone down from $1802 to $1673.

Half (53 per cent) of households have less than $17,000 in savings and 17 per cent have no savings at all. The cash squeeze isn’t limited to low-income households, with 11 per cent of households earning $100,000 or more annually having no personal savings.

Clearly people have realized that they need to be careful with taking on debt which they are not able to service and have commenced to slowly pay out existing debts from savings.

Borrowers who have excessive non tax-deductible debts, such as credit cards or a home mortgage, should pay them off as soon as possible.

Borrowers with a large amount of debt should review available methods of debt reduction including consolidating various unsecured debts with a higher rate of interest into their mortgage.

According to the latest research by Ratecity, Aussie household are holding $86.3 billion more debt this year than in 2009. While much of this debt is unsecured and therefore is not reflected in home loan commitment figures recently reported, credit cards and personal loan debt is higher than ever.

In an analysis of data from the Australian Prudential Regulatory Authority (APRA), RateCity found that households borrowed $771.3 billion in June – 12.6 per cent more than in the previous year $685 billion. This includes personal loans, credit cards, and owner occupied home loans.

The risk of over-borrowing is something that is greater today than this time last year. This is despite the interest rates being put up a number of times by the RBA over the past 12 months.

Australians have made more mortgage applications during the June quarter than in the March quarter.  According to a report by Veda Advantage, Home Loan applications were up by 2.3 per cent in the June quarter. Whereas consumer demand for unsecured credit has dropped with credit card application numbers being down by 9 percent.

While we have seen a minor increase in demand for mortgages over the past three months, the results over the past 12 months are showing a home loan application drop of 20.3 per cent compared with the June 2009 quarter. The most significant reason for the lower numbers on an annual basis is the changes introduced by government to the First Home Buyer Entitlements. As these dropped off so did the home loan application numbers.

According to a spokes person from Veda Advantage there’s no sign in Australia of  a US-style sub-prime mortgage crisis.

Veda Advantage statistics on bad credit instances including loan defaults, arrears, bankruptcy and the like suggest that the Australian numbers of bad credit loan applications have actually fallen over the last couple of years.

Consumer credit quality has improved. Over the last two years households have adjusted to the tougher economic conditions by being more cautious and people with poor credit history seem to be staying out of the home loan market.

The National Rental Assistance Scheme is not keeping up with the ever increasing rental costs therefore failing to provide adequate assistance to Low-income tenants trying to afford to keep a roof over their heads.

Over the past 15 years the median weekly rents in capital cities rose 41 per cent.  Whereas the Commonwealth Rent Assistance – an untaxed income supplement paid via Centrelink to low-income renters – has remained essentially unchanged.

Renters are struggling to cover the larger landlord bills from their shrinking allowance.

Singles without children saw among the largest shifts in relative expenses, with the government’s maximum rental assistance sinking from a 21.4 per cent share to 16.4 per cent over the period. Other renters, such as couples with children, saw a similar reduction, the TUV report said.

The falling share of rental assistance shows another aspect on Australia’s housing affordability problems. On the one hand we have a large number of low-income renters struggling to meet weekly payments, on the other we have home prices rising by as much as 20% over the past year in most capital cities. Therefore home ownership is becoming an unattainable dream for many.

The TUV report comes as politicians from the major parties focus on population issues, particularly around asylum seekers and long-term sustainable growth, but have said little about specific housing costs.

Charity organisations have also noted the stress on households, particularly for those on a low income.

”We have seen a significant increase in people seeking assistance from our organisation to help them meet rising rent costs,” said St Vincent de Paul research and policy manager Gavin Dufty.  ”Government need to review and assess the adequacy of the private rental rebate to ensure that it provides real housing assistance to those most in need,” he said.

The Financial Services Ombudsman has come out with a publication about what evidence a financial institution needs to show to establish to  the Ombudsman satisfaction that, on the balance of probabilities, it sent a document to a customer’s last known address.

It is expected that clients have the person that serves the notice complete a proof of service form and attach it to a copy of the default notice that was sent. Having read through the FOS note it seems this would be perfect and provide FOS with all the information they need.

There are a number of standard proof of service forms that should be used to make sure that the claim for payment is legitimate.

We find that using a proof of service form provides sufficient proof and if Court proceedings follow, we have all the service information on the one document that we need for a proof of service affidavit. Also the proof of service forms contain the correct service information for that state or territory so it ensures the client complies with the state legislation service requirements and the NCC service requirements as well.

The Premier of Tasmania has come out with an offer of $2 million in no-interest loans to help Tasmanians suffering from financial stress.

NILS Tasmania will manage a $1 million fund for essential household goods and expenses and another $1 million fund to help start small businesses.

These funds are a part of a $5 million Community Development Finance Fund announced during 2009.

David Bartlett has told a budget estimates committee the loans will be extremely helpful for low income Tasmanians trying to get back ‘on their feet’.

“The research shows us that the additional support for expanded items and services under the micro-finances program will greatly assist people facing financial hardship and help raise financial literacy and reduce dependency on emergency relief,” he said.

This is the first time since November 2006 when households believe that their Credit Card Debt is a Greater Problem than their Mortgage Debt.

According to the survey conducted, Victorians are Australia’s best savers.

It also showed the proportion of respondents nominating holiday or travel as their motivation for saving was 55.8 per cent, up from  55.0 per cent in March.

The Melbourne Institute household financial conditions index rose 17.2 per cent to 33.7 in June, up from 28.8 in March.

Credit card debt overtook mortgage debt as the main form for households, up almost 3 per cent, to 36.6 per cent.
The proportion of Australians saving grew marginally.

“About 48.8 per cent of Australian households saved part of their income in June 2010, up from 46.2 per cent in March,” the report said.

The June survey revealed three quarters of Australian households fully own their own home or have a mortgage, falling from 79.8 per cent in March and 78.8 per cent a year ago.

Just over 30.5 per cent of households said they would put new savings into deposit-taking institutions, while bank deposits remained the most popular form of savings.

More than 40 per cent of households said they were debt free, while a third said they held mortgage debt, down almost four per cent since last quarter.

Almost 60% of households interviewed indicated that they use only 10% of after tax income to apply towards debts.  Clearly debt balances continue to grow.

Queenslanders were more likely to run into debt than those in other states, while NSW and Victorian residents were more likely to save than their counterparts in other states.

The outcomes kept wages growth just inside the RBA expected 4.5%.

There has been a marked increase in Australian Home Loan Arrears in the first quarter of 2010.

According to a report released by Standard & Poor’s Ratings Services, arrears rose by 0.19 per cent to 1.44 per cent in the March quarter, while subprime RMBS arrears grew 0.67 per cent to 12.24 per cent.

“While we observe that the RBA has increased the official rates 6 times in a row and this may have contributed to higher overall arrears levels, we believe any worsening impact on RMBS collateral performance due to factors such as increased interest rates would likely be moderate and temporary,” Ms Chaplin said.

“In our view, if interest rates continue to rise, some first-home buyers who entered the property market when interest rates were historically low, and self-employed borrowers whose cash flows are more sensitive to economic conditions and borrowing costs, are likely to be most affected. Nevertheless, we believe the overall impact on defaults and losses is likely to be low if property values are preserved.”

Every time you make a  loan application to a financial institution, they will look at your credit report to decide is they wish to offer you a loan.  According to a recent research more than 80 per cent of Australians have no idea what  their credit report says about them.

Credit reporting agency Dun & Bradstreet says people should check their credit report at least once a year – it’s free – and be aware of what actions can affect a credit report.

Credit reports in Australia only include identification details, credit applications and negative events such as defaults and bankruptcies. But from next year, extra details such as a person’s repayment history are set to be added.

Dun & Bradstreet chief executive Christine Christian (pictured) says regularly checking your credit report can help people secure credit.

“Consumers should place themselves in a position to understand exactly what a lender will see, and this means the first step to applying for credit should be ordering a copy of your credit report,” Christian says.

“This will allow consumers to find out whether recent credit applications will make it look like they have taken on too much debt, or if previous late payments are listed, potentially making it harder or more expensive to get credit.”

Dun & Bradstreet research shows that 86 per cent of Australians have no idea what their credit profile looks like.

Your credit profile is a combination of many factors.  Have you ever had a default recorded against your name? Is the default paid or unpaid?  How many times have you applied for a loan?  Many people do not realise that making too many loan applications will prevent lenders from approving their loan application.

National Australia Bank says it considers an applicant’s credit history every time approval for lending is required.

“A credit report is an assessment of the customer’s credit history and a key piece of data used in the lending decision,” a NAB spokeswoman says.  You will find that most lenders check your credit report each time you make a loan application .

Naturally it would be wise to know what is recorded on your credit report so that if the report contains any errors you are able to take action to remedy these.

Banks are feeling particularly exposed through their $200 billion in commercial loans, many of which are not doing so well.

Of the largest financial commitments made on a geographical basis, four states – NSW, Victoria, Queensland and Western Australia – are now firmly in the sights of lenders looking to reduce the financial burden of commercial property loans on their balance sheets.

In particular, Queensland and WA have been cited by the two largest banks, the Commonwealth and Westpac, as a problem area given a reduced demand for commercial and large residential developments and an oversupply of land.

CBA’s troubles have grown as a result of its acquisition of BankWest whose growth strategy before that deal largely centred on the eastern states, with particular emphasis on lending to the property sector. This was in addition to the market values dropping in WA and associated problems with this.

According to analysis of the big four banks’ latest half-year results by BusinessDay, Commonwealth and the Westpac Group have more than $100 billion tied up in loans to the commercial property sector. In the case of the Commonwealth, its latest figures revealed that commercial property loans make up the largest proportion, 25 per cent, of its most troublesome exposures based on an industry-by-industry breakdown.

NSW is responsible for almost 50%  of its mortgage loans while Victoria is responsible for almost 20 per cent, WA for 12 per cent and Queensland 11 per cent.

The major banks are continuing to report an increase in the level of of bad loans especially in the commercial property sector.

Westpac and St George both blamed the industry for a large part of the increase in their stressed exposures at the announcement of the group’s interim results earlier this month. The industry makes up nearly 33 per cent of the group’s business lending portfolio, and 16 per cent of the loan book is now classified as stressed.

NAB, which prides itself in being the largest “business” bank, mirrored the concerns of its larger rivals. Commercial property makes up $48.6 billion, or 15 per cent, of its total loans and it experienced significant increases in its bad credit loans and loan defaults, write-downs and those that are now past the key 90-day indicator for repayment for the period up to March 31 this year compared with the previous half.