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 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.

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.

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.

The biannual survey by data intelligence company Veda, discovered that 4 out of 5 Australians are worried about their ability to meet debt repayments in the future. This is a significant increase from 3 our of 4  this time last year.

Given the global economic woes and economic problems locally, many businesses are closing their doors leaving twenty percent of survey respondents are struggling with their current levels of debts.

However, about 29 per cent of this sub group were considering applying for more credit in the next six months, the survey found.

It is a worry that consumers already heavily in debt are looking to take on further debts in order to maintain their current lifestyle and not fall into arrears with car loans, home loans, credit cards, etc.

The survey found people aged 25-34 were the most worried about their ability to repay debt and the most likely to borrow more in the next six months.

About 70 per cent of this age group had received help from a family member to repay debts compared to about 35 per cent for the rest of the population.

Borrowers should make sure that they organise payments and money transfers early because some may have to wait until December 29 for processing of payments made after 6pm (AEDT) this Friday 23rd December.

A recent survey conducted by Loan Market Group found 53 per cent of Australians want to increase savings in 2012.

Most consumers are looking to refinance their home loans in the new year as well as reduce levels of debt, pay out car loans and credit cards. There is significant interest in debt consolidation.

Only 2 per cent of the 581 respondents said they would donate more money to charity.

Loan Market chief operating officer Dean Rushton said Generation Y respondents were even more determined to bolster their savings buffer with 68 per cent saying that was their financial focus in 2012.

“The consumer caution we saw for much of 2011 looks set to continue in the year ahead,” he said.

Consumer confidence is down due to the economic uncertainty in Europe and the USA.

“That situation is not likely to change even though Australia looks well prepared to weather the impact of the European crisis on the world economy.

“The poll results indicate that the Reserve Bank of Australia may again have to cut interest rates during the first quarter of 2012.