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.

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.

According to recent domestic data, there is a real need for another rate cut, with both consumers and businesses are still low on confidence and high on caution. Loans is a dirty word with people spending less and saving more.

Another rate cut would take the official rate to only 4 per cent – 100 basis points above the lowest level ever

Overall the level of personal borrowing including personal loans, credit cards and car loans is down by over 1% during 2011.

“Australian consumers seem to have lost their interest in taking out loans for consumption and lifestyle purposes. Even the demand for loans to acquire assets is down.

“Housing credit is more solid (November 0.5 per cent) but annual growth at 5.7 per cent is still a fraction of the 15 per cent pace set in the decade prior to 2007.

Demand for business credit was flat in November and has barely expanded by 0.9 per cent over the past year. This sluggish corporate borrowing arguably also reflects a preference to use retained earnings rather than use external funding sources.

Given all of the above, the chances of another rate cut in February are very strong.

Australia’s “high economic resiliency and financial strength” and reasonably low debt levels were the key to Moody’s decision to retain its Australian rating at a health AAA level.

It followed last month’s upgrade of Australia’s credit rating to AAA by Fitch.

More than 500 European banks tapped the central bank’s credit program, accepting about 489 billion in loans.

Economists had expected the banks to take up about 300 billion in funds.

The development came after Moody’s warned earlier this week that Britain’s AAA rating could be under threat if the European crisis worsened.

A number of other major European countries including Spain and France have been placed on negative watch by the global ratings agencies as the debt crisis in Europe becomes a real concern worldwide.

Standard & Poor’s also controversially stripped the US Government of its top-notch AAA rating in August for the first time in more than 50 years.

Moody’s warned that the only development that may hurt Australia’ credit rating long term is if the federal budget was to stay in deficit long-term. Having control over the country’s debt levels is key to the credit rating we receive.

The Federal Government has received praise for its policies to deal with its ageing population.

Treasurer Wayne Swan said the ratings agency had given a resounding endorsement of Australia’s sturdy public finances and strong economic fundamentals.

“At a time when other developed economies have had their ratings cut … Australia stands tall in the world with its gold-plated AAA status safe and secure,” Mr Swan said.

That was an increase from a downwardly revised figure of 51,639 in September.

Economists’ expected that the home loan numbers would remain unchanged from September to October.

The Australian Bureau of Statistics (ABS) said on Monday that total home loans value in terms of an overall dollar amount had declined by 2.5 per cent in October, seasonally adjusted, to $20.458 billion.

Given that interest rates were reduced twice in a row once in November and then in December, expectations are that home loans numbers will continue to increase once statistics will become available to the end of 2011.

Many experts believe that this will not be the last cash rate reduction. Given the situation in Europe there are predictions that further cash rate reductions will be needed in the new year.

“The directional bias for interest rates from here will be down for the next two or three quarters. Hence, there is scope for another cut in rates to 4 per cent at the February meeting.”

The cut may be delayed for a month or two if the local economy continues to hold up. Or it might not happen at all. On the other hand, a meltdown in Europe could see an out-of-cycle emergency cut in December or January.

The prospect of a 3 per cent cash rate by mid-year, as the market is pricing, seems too extreme. Another global recession of the same magnitude of the post-GFC event cannot be the central case,.

Consumers are especially concerned about being able to earn enough to cover the cost of utility bills. Many also expressed concerns with lack of job security and poor economic management skills of the Australian Government.

Survey participants have stated that over 50% have had to access their savings in order to cover the cost of living and repayments for car loans, home loans, credit cards, rental, school fees and day-to-day bills. Consumers look for debt consolidation loans to help them maintain control over their bills and repayment obligations.

Almost 10 per cent have of the 1086 people surveyed said they have saved more to combat the price hikes.

When asked about their confidence in the Australian economy for 2012, 56 per cent were “fairly confident” or “very confident” (compared to 75 per cent in 2010), 20 per cent were “a little worried” (compared to 11 per cent), 19 per cent were “not worried” (compared to 13 per cent), and 5 per cent were “very worried” (compared to 2 per cent).

“Year on year confidence in the Australian economy has declined, however, it is good to see the majority of Australians still see a positive economic outlook for 2012,”

Despite the low levels of consumer confidence one in five consumers has stated that they intend to take out a home loan during 2012 and 9 per cent of mortgage holders plan to tale out new home loans.

Gen Y was the most positive about the economy and purchasing property,

Most people interviewed ie, 86 per cent feel say the rental squeeze is having an effect on property prices in their state.

Three out of ten consumers believe Australian property prices will increase over the next 12 months, The same number believe that they will decrease and the same number believe that they will remain the same.

In terns of a buffer for their home loans, 67% of respondents only have enough savings to cover 2 months of home loan repayments.

People without a deposit or with only a few thousand for deposit are hoping to borrow hundreds of thousands in order to purchase property. In the current economic climate lenders are even more conservative than they were years earlier.

Qualifying for home loans today is much more difficult than in the past, and rightfully so. The last thing that we want to see in Australia is a repeat of what happened in the US with thousands of people walking away from their homes because their home loans are substantially higher than the value of their homes.

Many people who had purchased a property in the past 3 years and borrowed 90% or more as a home loan, are most likely already behind…ie. their loan is higher than the value of their home. This is a dangerous situation.

Borrowers who want a safety barrier when making a purchase should try and keep their home loan under 80%. If you do not have the required deposit – what is the rush? In a growing market, people want to make a purchase quicker in order to ‘freeze’ the purchase price before it goes up further.  In the current market, prices are already soft and it is not clear how long they will remain so, It is prudent to save a significant deposit before making a purchase.

Following a review of broker activity, last week ASIC had highlighted low doc loans as a growing area of compliance concern under the new NCCP.

According to ASIC, the major non-compliance risk associated with offering low doc loans was the steps taken by mortgage brokers to confirm applicants income.

While the ASIC review will undoubtedly make some brokers nervous about writing low doc home loans, Mr Rehayem said any extra caution was unnecessary.

Pepper Home Loans are a leading Australian provider of non conforming loans. Pepper do not just get a loan application and approve it. Pepper already spend significant time and resources on ensuring that each loan application processed abides by the responsible lending requirements and make sure borrowers have the ability to pay back the loan.

“We wouldn’t put our licence in jeopardy, so brokers need not be worried that ASIC is going to suspend their license for failure to meet the new requirements.

Providing brokers make a reasonable level of inquiry and Pepper Home Loans accepts the deal, there should be nothing to worry about.