Financial citizen or debtor?

Australia is not alone in having high consumer debt levels. There is worldwide talk of maxed-out credit cards, mortgage stress, irresponsible lending and reckless borrowing, all requiring financial literacy programs. Without credit it can be difficult to participate in economic life as a full financial citizen; with credit there can be an increasing debt spiral. For some, access to consumer credit has meant buying a house and living a good life. In the case of those unable to service loans, credit merely intensifies the inability to service the loan and pay for other requirements for living. The problems of overindebtedness, financial exclusion and social exclusion are as relevant in Australia as in other countries. As Howell and Wilson point out, consumer protection in credit markets predicated on competition, information disclosure and consumer choice create increased risk for the vulnerable and do not impose obligations on lenders to provide fair and safe products.

The biggest sector of the consumer credit market is for owner-occupied housing. There are also high levels of personal non-housing debt. As well as a market for consumables, there is also a market for recurrent living expenses. Access to credit is a key problem for some consumers. For others, there is too much access to credit. At the same time, real disposable income after mortgage repayments has increased.

The last decades have seen new providers and new products.