Credit unions and building societies encourage responsible lending as rates rise
04 March 2008
The Reserve Bank’s announcement of an interest rate rise of 0.25% will place more families under financial pressure and credit unions and building societies urge all lenders to deal responsibly and fairly with their customers.
Louise Petschler, Chief Executive Officer with Abacus – Australian Mutuals, the association for credit unions and mutual building societies, said financial institutions have a special responsibility in the community and must ensure that they engage in responsible lending practices.
Credit unions and mutual building societies offer a range of competitive retail banking products. According to the RBA, credit unions and building societies variable housing lending rates as at 31 January 2008 were on average 18 basis points lower than the banks.[*]
“Credit unions and mutual building societies are responsible lenders. We work hard to ensure that we don’t lend our members more than they can afford to repay and when a member does get in financial difficulty, that we do as much as we can to solve those problems” said Ms Petschler.
“In the current environment, people looking to take out a loan should consider their household budget carefully and factor in the possibility of further interest rate rises before deciding how much they can afford to borrow.
“Responsible lenders, like building societies and credit unions, will help borrowers to work out how much they can safely borrow.”
Ms Petschler also encourages borrowers to contact their financial institution if something goes wrong.
“Things don’t always go to plan. The important thing to remember is that if you get into trouble – approach your financial institution and try to work out a solution with them before the problem gets worse.”
Through Abacus, credit unions and building societies also provide helpful tips and advice to consumers. See www.abacus.org.au for details.
For more information:
Louise Petschler, CEO
0408 239 226
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Mark Degotardi, Head of Public Affairs
0419 998 201
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[*] Reserve Bank of Australia, February Statement on Monetary Policy, accessed on their website at www.rba.gov.au (or by clicking here) on 4 March 2008.
