A Loan Market survey has identified that 2 out of 3 of respondents expect to see the RBA knife to rates when it meets on February 7. Thirty-nine per cent are forecasting another quarter of a percentage point cut, while 27% expect a deeper 50bp cut.

Rate cut does not only makes loans cheaper it also contributes significantly to consumer confidence and has the overall affect of stimulating the economy.

“The RBA lowering rates in November and December last year came as a welcome relief for borrowers and struggling sectors such as retail, but there are no signs of an improvement in the current global economic environment, particularly the volatile situation in Europe.

How much of the rate reduction will be passed on to holders of home loans, car loans, personal loans and credit cards, remains to be seen.

Even if in some cases a loan offers more flexibility, the financially strapped borrower tends to select loans with lower repayments today than necessarily thinking long term. While this works well in some cases in other cases the borrower is simply postponing the inevitable cost to a later period.

Line-of-credit home loans had fallen to 4 per cent of all mortgages as of November – a 13-year low – from a peak of 10 per cent at the end of December 2005.

An executive director of ING Direct, Brett Morgan, says as well as seeing less take-up of line-of-credit loans, the bank is finding existing customers are paying them down quicker and refinancing to standard home loans with offset facilities or in some cases to fairly basic home loans.

The Producer Price Index, considered to be a strong indicator of the CPI, came in just below analysts’ expectations at 0.3% for the quarter. With CPI figures expected to be announced tomorrow, Westpac senior economist Justin Smirk has said inflation risks are weighted to the downside.

Other than inflation – there are daily reports of job losses across the board in the car industry as well as in manufacturing. Interest rate reduction can help boost demand in these areas and possibly create more jobs in the longer term.

Should the Reserve choose to move on rates when it next meets, the question remains whether banks will choose to pass on the cut. According to the Australian Financial Review, a Morgan Stanley analysis has predicted the banks will reprice home loans in an effort to offset higher funding costs, passing on only a fraction of any RBA cuts.

If this happens the expectation of cheaper loans as a result of rate cut, may not be fully realized.

The Treasurer, Mr Swan, said that he welcomes new lenders to Australia and believes that they will aid the competition in place for home loans and will only benefit the consumer.

At least three big banks, the $62 billion Mitsubishi UFJ Financial Group, $42 billion Sumitomo Mitsui Financial Group and $35 billion Mizuho Financial Group, are said to be considering operating here, the Daily Telegraph reports.

The ABS today said the seasonally-adjusted commitments were down from $7.806 billion in October. This includes, personal loans, car loans, credit cards and the like.

Commercial finance overall also declined during November. There was a drop of 9.6 per cent to $33.098 billion, seasonally adjusted, from $36.624 billion in October.

Lease finance was up 15.1 per cent to $490 million, compared with $426 million October.

Home Loans taken out by owner occupiers increased by 2.2 per cent to $13.790 billion, from $13.487 billion in October.

According to almost 300 borrowers and their families, banks have offered them loans which are outside of bank guidelines and which should not have been offered and now, the borrowers are facing losing their homes and some have already lost their homes because they are unable to afford their home loans.

Retired British insurance broker Roger Brown, who is orchestrating the case, has set up a website takingonbanks.com and is currently seeking claimants.

According to Mr Brown, many home and property owners are currently experiencing financial hardship through no fault of their own because they should have not been given the loans that they currently have.

If the case proves successful, it will be the first time banks have been prosecuted under the new provisions of the National Consumer Credit Protection Act.

According to Australian Securities and Investments Commission (ASIC) some of CBA’s advertising material promoting its Wealth Package loans did not reflect the true cost of the loans.

ASIC was concerned the ads did not include a $350 annual fee in the advertised comparison rate.

Under the National Credit Code, advertising of credit products that include an annual percentage rate must also include a comparison rate. Such comparison rate needs to fully reflect the complete cost of these loans.

“Comparison rates help consumers work out the true cost of credit,” said ASIC Commissioner Peter Kell.

“It can be difficult for people to compare home loans, car loans or personal loans with different combinations of interest rates and fees. This is why credit providers must include the comparison rate when they advertise a rate or a weekly payment for loans.

Comparison rates incorporate the fees, charges and interest relating to a loan to better reflect the true cost of credit.

ANZ has acted quickly to remove its online bank statements after customers received electronic statements belonging to other people.

An ANZ spokesman said the bank had attempted to reload statements over the weekend and released them to a small batch of customers. However this resulted in the current problem as up to 60 of those customers were then able to view other people’s statements.

Currently ANZ online statements are disabled while the banks is attempting to fix this problem.

ANZ has issued a statement of apology to all affected customers.

Genworth Financial chief executive Ellie Comerford told the AFR that not withstanding the poor growth levels of 2011, there was an some minor improvement in demand for housing and consequently home loans towards the end of 2011. Much of the new demand was as a result of lender discounting. There is expectation that rates will be coming down further this year and lenders will maintain a high level of competition in the market.

Lenders are unlikely to start easing lending criteria given than many of the current restrictions were introduced in the aftermath GFC.

Lenders would be driven to develop products for borrower groups struggling with housing affordability.

A recent Genworth survey showed that 56% of respondents were forgoing spending on day to day items such as groceries to save up for a deposit on a property.

“In the 1970s the average age for a first-home buyer was 27 and now it is 31.8.

Home affordability has eased but is not as yet where it need to be.

Unfortunately unsecured loans beyond a couple thousand generally have the same lending criteria no matter which lender the borrower makes an application through. There is simply no such financial product as a bad credit unsecured personal loan or a low doc unsecured personal loan.

If you have been declined for a personal loan with a bank because you have some paid defaults on your credit report, you will also be declined through other lenders that you may approach. What will affect your ability to qualify is your ability to offer some security for this loan – eg. real-estate or a motor vehicle.

If you have a problem with your financials, ie your tax returns are not up-to-date, there are no low doc personal loans available. Any loans you may qualify for will need to be secured by real-estate.