Sunday

Homes squeeze hurting

Ben Butler

September 22, 2007 12:00am

NEW home sales have slumped because of the housing affordability crisis, new figures show.

The Housing Industry Association said sales of new homes across Australia dropped 8.6 per cent in August.

And the mortgage squeeze shows no sign of slowing down in Victoria.

Supreme Court actions by lenders seeking to repossess land jumped by almost 50 per cent to 2700 in 2005-06.

Numbers rose last financial year, with 2734 actions.

Mortgage industry players blame each other for the pain.

Australian Bankers Association chief executive David Bell said non-bank lenders were at fault.

Mr bell said up to 80 per cent of court applications did not relate to banks, depending on the state.

But the boss of leading non-bank lender Wizard, Mark Bouris, attacked mortgage brokers.

"Unfortunately, a large number of mortgage defaults and repossessions can be attributed to a small group of irresponsible brokers and lenders who operate in the sub-prime market," Mr Bouris said.

Mortgage brokers take a commission for acting as intermediaries between lenders and borrowers.

The head of the brokers' peak body hit back.

Mortgage and Finance Association of Australia chief executive Phil Naylor said the blame game was disappointing.

"The reality is there's no information in the statistics that allows any of the finger-pointing to have any credence," Mr Naylor said.

Consumer Action Law Centre director of policy and campaigns Gerard Brody said there had been a drop in lending standards.

"It's been too easy for some lenders and brokers to go out and lend to consumers who can't pay back loans," Mr Brody said.

Some lenders give loans for the purpose of taking borrowers' houses when they cannot make the repayments.

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