Treasurer Josh Frydenberg's plan to make it easier to get a home loan has been opposed by 125 organisations in the letter, which includes the Consumer Action Law Centre, Financial Counselling Australia, and the Australian Council of Social Services (ACOSS). 

In a bid to kickstart the COVID recovery, the Federal Government is looking to remove the onus on lenders to ensure they don't lend to people who can't service a loan, shifting the responsibility to borrowers. 

The government forecasts the changes will cut through red tape and accelerate the credit approval process. 

But community groups believe the reforms will leave people worse off and lead to a debt disaster, with Australia in recession and already having the second highest level of household debt in the world. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
Principal & Interest
Featured 4.6 Star Customer Ratings
  • No monthly or ongoing fees
  • Unlimited free redraw
  • No application fee
5.99% p.a.
5.90% p.a.
Principal & Interest
Featured Apply In Minutes
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.14% p.a.
6.16% p.a.
Principal & Interest
Featured Unlimited Redraws
  • No annual fees - None!
  • Get fast pre-approval
  • Unlimited additional repayments free of charge
  • Redraw freely - Access your additional payments when you need them
  • Home loan specialists available today
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

"Responsible lending laws were designed to stop the reckless lending we witnessed throughout the global financial crisis and the Royal Commission," Karen Cox, chief executive (CEO) of Financial Rights Legal Centre said. 

"It’s beyond belief that less than two years after the royal commission made this its first recommendation that the government wants to go directly against it.

“Before safe laws were introduced, lenders regularly sold unaffordable loans to people, including pensioners, people on Centrelink payments and casual workers, who they knew would never be able to repay the loans.”

In the wake of the Royal Commission and the 'ASIC v Westpac Shiraz case', banks and Reserve Bank (RBA) Governor Philip Lowe, voiced concerns lenders had become too conservative in their lending and the flow of credit was too slow. 

Australian Banking Association CEO Anna Bligh said these reforms would be a positive step for the Australian economy. 

"The government’s changes will simplify the system while preserving protections and ensuring customers still have a right to have complaints resolved by AFCA [Australian Financial Complaints Authority]," Ms Bligh said.

"A simpler system means a faster, less complicated process for customers.”

Australians exposed to "terrible lending practices"

Fiona Guthrie, CEO of Financial Counselling Australia, said many people were struggling financially at the moment, and the last thing they needed was to be loaded up with more debt. 

“We implore the Senate to listen to the warnings of financial counsellors, because our only interest is that of our clients'," Ms Guthrie said.

"We cannot in good conscience sit by and let these laws go through without doing what we can to stop them.

“Even with the current responsible lending laws financial counsellors still see too many vulnerable people with too much debt. We despair at the thought that this will get worse.”

Organisations said the open letter is supported by new national polling which found 79% of people thought banks should be required to always check a customer's ability to repay before offering a mortgage.

Gerard Brody, CEO of Consumer Action Law Centre, said under the reforms, borrowers would have existing rights to sue their lender for unsuitable lending removed. 

"Lenders would also have far fewer incentives to comply with good lending standards, because penalties for breaching laws are being removed and weakened," Mr Brody said.

“Newly released November 2020 polling shows that 82% of people believe there should be fair compensation for people when they are wronged by financial institutions.

"The government's plan puts this at risk.”

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