The amount of money being borrowed for mortgages and other loans in Australia is at its lowest level since the mid-1990s, according to a new report by the Reserve Bank.
Credit union loans were the fastest-growing form of credit in 2016, reaching $1.8 billion, up $300 million on 2015 figures.
That’s a 5.4 per cent increase on 2015, when the bank was estimating that it would see a 6.2 per cent rise.
Credit union loans are an emerging way of investing in housing.
The Federal Government says they could help reduce the burden on families by helping to pay off their mortgage and buy their first home.
But the Australian Council of Credit Unions warns that too many people are taking out credit cards to buy houses, leaving them without the funds they need to get a loan.
It says that in 2015 there were 1.3 million people on credit cards.
Credit unions have been providing the money for decades, but the Government has stopped allowing them to do so.
The Government said it would be changing that by allowing the credit unions to offer more loan options to people.
Credit Union CEO Richard Gough said the number of people with a mortgage on their heads had increased from 4.4 million in 2007 to 7.2 million in 2015.
“The trend is in the right direction,” Mr Gough told news.com.au.
“I would say the overall trend is pretty good.”
The bank says it expects this trend to continue as it is not too late to reverse it.
In 2015 the average balance on a mortgage was about $500,000.
In 2016 that dropped to $425,000, but is expected to increase again to $475,000 by 2020.
While some people may have a balance that’s already been taken out, many people have not, and some may have debts that are not being serviced.
Gough said it was hard to find information on the extent to which people with mortgages were using credit unions as their main source of income.
Mr Gough also said that a growing number of Australians were going to banks to make payments to get out of their debt.
That was not the case in the past, he said.
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