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Date Published : Tuesday, April 22, 2008
As the credit crunch continues to affect the financial markets across the world, consumers are increasingly feeling the aftermath in their pockets.
High interest rates, uncertainty in the property market and changed lending criteria have all hit Australian consumers across the last few months.
However, the worst could still be yet to come. According to a study by the Mortgage and Finance Association of Australia (MFAA), the global credit shortage is reducing competition among lenders, as smaller financial institutions write off losses into the billions of dollars.
As a result, there will be less choice for those requiring a personal loan or a mortgage in the future.
At home, in the UK and the US, banks and lenders are struggling to cope with the shockwaves of the crunch, which started to bite in the US at the tail end of 2006. The effects have taken a while to filter through to the average Australian consumer but, now that they are here, it could mean a massive shake up for those requiring any form of loan.
MFAA chief executive Phil Naylor told the Adelaide Advertiser: "If non-bank lenders are squeezed out of the market because of a lack of access to funds, we will likely see a back-to-the-future scenario with banks dominating housing lending.
"Consumers need competition in the home-loan industry to ensure there are a lot of product options available to them and to put downward pressure on interest rates.
"Higher interest rates will mean less access to housing finance and home ownership."
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