David Bell, Chief Executive of the ABA, said: “In contrast to the turmoil affecting some overseas banks, the Australian banking sector remains strong and continues to provide core services – making loans and operating accounts.”

Banks are responsible lenders and any suggestion that they are not is ignoring the following facts:

1. Based on the ABA’s analysis of data and discussions with Supreme Courts, it is reasonable to suggest that anywhere between 65% and 80% of applications for repossession do not relate to banks, but to other lenders.
   
2. Banks’ conservative risk profiles and the rigorous assessment of the customers’ capacity to repay are reflected in the low level of loan delinquencies. The number of people with loans from banks who are behind in their home loan repayments remains extremely low at 0.4%.¹
    
3. The Prime Minister yesterday made reference to Australian banks’ low arrears rate and how this contrasted with the higher arrears rates in the United States.
   
   ‘And when it comes to arrears rates, that is, people who are falling back or behind in their repayments to banks, ours is very low, something like less than one percent, the United States five or six times higher than that. So, there are great differences between the state of the US financial system and the state of the Australian financial system, particularly in relation to the banks that I just referred to.’ ²
   
4. Banks are subject to prudential supervision by the Australian Prudential Regulation Authority (APRA). Non-regulated lenders are not prudentially supervised by APRA, and often act more quickly on a mortgage default than a bank.
   
5. Reserve Bank data show that annual growth for housing loans is now the slowest in 22 years (since 1986) while personal lending is growing at 3%, the weakest pace since 1994.
   
6. The Reserve Bank notes that banks’ credit card lending to households has slowed.  Households’ use of credit card debt grew by 8% over the past year, compared with average growth of 12 – 13% over the previous two years.
   
7. The ratio of household debt to disposable income is now growing at the slowest pace since 1990. In fact, over the past year, there has been a small fall.