Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Hansard source

In relation to the specific question, I have some advice here that applications to the Victorian and New South Wales supreme courts to foreclose on mortgage loans have increased over 2005 and in the first half of 2006. But while these trends are important in their own right, an application to foreclose does not necessarily translate to a writ for repossession, and applications for dispossessions make up a very small proportion of overall households with a mortgage.

APRA noted in June that in the last year arrears rates, loans where payments have passed due date but not considered impaired due to the quality of collateral, have risen somewhat according to data reported to APRA as well as industry data on securitised loans. So there may be some pick-up in impaired loans—that observation is correct—but I think that one has to see this in the context of the most extraordinary period in Australian history of sustained low inflation and sustained low interest rates as a result. Much of it has been the result of this government’s very careful stewardship of the economy, which has been reflected by the public’s confidence in our government at the last four elections, where economic management has been the critical issue and where the Australian people have judged the Labor Party to be seriously failing in their capacity to present any sort of credible alternative to the Australian people.

As a result of the 15 years of consecutive economic growth in this country, 10 of those under us, and, as I say, the prevailing very tight job market, the low inflation, the low interest rates and the deregulation of the financial markets, which has brought to bear much greater competition for the provision of housing funds and the greater availability of housing funds, I think it is fair to say—and some of that, at least, was begun under the alternative government, the Labor Party—that there is, as must be expected in a deregulated environment, a greater and potential propensity for risk.

We have repeatedly said throughout our 10 years in office that potential home buyers should always be very conscious of their capacity to service their loan, they should be conscious of the fact that interest rates can vary and they should take clear and careful advice before they enter into a loan. There is no doubt that the great bulk of Australian families have benefited enormously from our stewardship of the economy, which has provided them with job opportunities, rising real wages, relatively low interest rates, job security and housing affordability rates that by and large have been very good relative to wages. Obviously, we are disappointed, as anyone would be, if families get into financial difficulty and cannot continue to service their loans. It is a reminder to everybody to be extremely careful before entering into these sorts of arrangements and that they should, in a less regulated environment, be conscious of those risks.