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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.


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BFCSA: Stretched Australians unable to reduce debt

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Stretched Australians unable to reduce debt

Australian Financial Review Apr 8, 2019 6.00pm

Matthew Cranston


Less than a third of Australians expect to reduce their debt load this year – down from 60 per cent last year – and not because they don't want to but because they can't, a survey by EY shows.

Australia's household debt-to-income ratio is 190 per cent, and the Reserve Bank of Australia says it remains one of the biggest vulnerabilities in the economy.

The heightened level of debt is unlikely to change even with interest rates expected to fall over the coming year, and the introduction of income tax cuts helping some to reduce debt rather than increase spending.

When survey respondents were asked whether they expected to reduce, increase or keep personal and household debt at the same level, 28 per cent said they would reduce their debt level, down from 60 per cent in last year's survey.

Essential services

In 2018, 73 per cent of high-income earners ($150,000 or more) said they expected to pay down debt. That has fallen to 37 per cent.

"Given that our survey also showed that over 60 per cent of Australians are ‘extremely’ concerned about the increasing cost of living – the cost of essential services and increasing energy prices – it seems that more households are not paying down debt because they do not have the capacity to do so," EY chief economist Jo Masters said.

Key data on lending to households and businesses will be released on Tuesday. Lending to households for personal finance excluding refinancing has fallen more than 15 per cent in the 12 months to December while lending to households for the purchase of homes has fallen more than 19 per cent.

Financial stability

Last month the RBA noted there was "very little debt related to non-housing loans such as credit cards or car loans", so the focus is house prices, which have already sunk 14 per cent from their peak in Sydney.

"The question we are asking ourselves is, given the high levels of debt and falling housing prices, are there any significant implications for financial stability?" RBA assistant governor Michele Bullock said.

"The answer would be 'no' at this stage. This is not to downplay the financial stress that some households are experiencing."

S&P director Erin Kitson said the stress experienced by households managing debt was being noticed at the margin.

"In terms of the level of indebtedness there are some correlations with mortgage arrears, and advanced arrears of more than 90 days are making up a larger part of overall arrears," Ms Kitson said.

One reason advanced arrears were comprising more of overall arrears was because households with their higher levels of debt were now more sensitive to changes in the economy.

"Softening economic conditions are likely to put pressure on mortgage arrears and prepayment rates in the next 12 months," Ms Kitson said.

But even with the higher proportion of constrained budgets and debt management, the EY survey found that the number of people looking to further add to their pile of debt had also increased.

Feeling the pinch

The number who said they would increase their debt level over the next 12 months has risen to 16 per cent, up from 4 per cent last year.

In the income bracket of $70,000-$149,999 the number of people looking to increase debt has risen to 21 per cent up from just 6 per cent last year. The number in that income bracket who were looking to decrease their debt dropped to 34 per cent from 62 per cent last year.

Recent tax cuts announced in the federal budget could be used to help reduce debt.

"Our survey results suggest that income tax cuts will be welcome by households feeling the pinch, although there is a risk that a portion is directed to debt reduction rather than spending," Ms Masters said.

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