PHOTO: Access to credit is being examined by a Senate inquiry. Photo: Paul Rovere

Overhauling responsible lending laws while the value of new home loans is at a record high will do more harm than good, consumer groups warn, creating a greater risk for borrowers and the economy while offering little reward.

Plans to unwind responsible lending laws were announced by federal Treasurer Josh Frydenberg last September, in a bid to increase the flow of credit to households and businesses as Australia’s economy looks to recover from the coronavirus pandemic.

Since then, the value of new home loans has reached record highs, despite ongoing economic uncertainty, with consumer groups pushing back against the proposed changes, which are now before a Senate inquiry.

“We’re seeing record loans,” said Julia Davis, policy and communications officer at the Financial Rights Legal Centre.

“We’ve sold more loans in Australia than ever before in history … that doesn’t tell me that we need to ease responsible lending standards,” Ms Davis said.

Along with CHOICE and more than 120 organisations across the country, the centre called on the government to save “safe lending” in an open letter to Parliament late last year.