Sydney, 16 May, 2007: The Australian Bankers’ Association (ABA) says the regularly published statistics on the state of the housing market accurately reflect defaults in household lending.

The ABA is responding to media stories today that housing default data are understating the real housing default situation. These stories are based on reported comments by debt collection company Prushka.

It is important to recognise that no evidence has been produced (including Prushka’s comments) indicating that the housing loan statistics produced by the Reserve Bank of Australia (RBA) and ratings agencies are understating housing loan impairment.

The RBA¹ and ratings agencies statistics are comprehensive and show bank housing loan defaults are at very low and stable levels. If a customer defaults on their mortgage, banks always report defaults, regardless of whether a customer decides to sell their property before their bank seeks repossession.

Prushka’s comments about repossessions simply relates to how properties are sold when borrowers can no longer afford the repayments. It is a sound outcome that property can be sold through mutual agreements rather than through adversarial court processes. Mutual agreements on how best to resolve financial problems are a core part of the banker/customer relationship.

Indeed, if the number of mutual agreements to sell properties increases relative to court-enforced sales, this is actually evidence that borrowers are willing to sell voluntarily because, in all probability, the borrower can see an opportunity to realise some equity in the property.

For further information:

Heather Wellard
Director, Public Relations
Phone: 02 8298 0411
Mobile: 0409 830 439

ENDS