More than 75 per cent of homeowners took advantage of low interest rates to add to their mortgage loan or take on other forms of debt, a new survey has found.

The poll by mortgage broker, Loan Market Group, found that 44 per cent of homeowners increased their home loan while interest rates were at their lowest in nearly 50 years.

One in 10 added to their credit card debt, slightly fewer took on a personal loan, and the same number made a purchase on interest-free terms, while seven per cent borrowed from their relatives.

Just 23 per cent were prudent in not taking on any more credit.

The increased debt burdens were of concern now the Reserve Bank of Australia (RBA) was raising the cash rate, Loan Market Group chief operating officer Dean Rushton said.
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Prime Minister Kevin Rudd’s use of the word “billion” to describe projected government debt has provoked a raucous response from opposition MPs in parliament.

Opposition Leader Malcolm Turnbull began question time on Monday by asking Mr Rudd to express “in a sum of money” the maximum amount of government debt the budget would create.

Both Mr Rudd and Treasurer Wayne Swan have been criticised for avoiding the use of “billion” when referring to the debt, preferring to describe it as a percentage of gross domestic product (GDP).

“Gross debt peaks at around about $300 billion,” Mr Rudd replied to cheers from the opposition benches.
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photo credit: furryscalyA $58 billion federal budget deficit is forecast for next financial year - it’s Groundhog Day, according to shadow treasurer Joe Hockey.

Launching into a tirade against Treasurer Wayne Swan’s second budget, which forecasts that about one million people will be unemployed in 2010/11, Mr Hockey said deficits were inevitable when Labor was pulling the nation’s purse strings.

“It’s like Groundhog Day in this place,” he told parliament.

“The Labor party comes in and Australia heads towards recession.

“The Labor party comes in and we reach record levels of deficit and debt.”
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Australians face working longer and harder as the labour force shrinks, while the Rudd government pins its hopes of economic recovery on the biggest nation building program since the Snowy Hydro Scheme.

But families will feel the most pain in Labor’s second budget delivered on Tuesday night because of moves to tighten access to so-called middle-class welfare which blossomed under the previous government.

Pensioners are the budget’s biggest winners and will receive a long-awaited weekly increase of $32.49 for singles, while couples will get a $10.14 a week increase.

Cross-bench senators Nick Xenophon, Family First’s Steve Fielding and the Greens, whose support will be crucial to passing the budget bills through parliament, had a lukewarm reaction to the budget.
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The federal government says it’s nothing more than “wild speculation” to suggest it could take almost 20 years to pay back the debt it’s currently accumulating to help cushion the Australian economy from the global financial crisis.

News Ltd has reported it will take 19 years to balance the national books if Labor runs a budget deficit of between $35 and $50 billion.

But Treasurer Wayne Swan says that analysis lacks credibility.
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Borrowing rebounded in January but consumers continue to reduce their debt as fears of a recession loom.

Total private sector credit rose 0.6 per cent in January, Reserve Bank of Australia (RBA) data released on Friday showed, a turnaround from the 0.2 per cent decline in December

The annual pace of growth fell by 0.4 percentage points to 6.1 per cent in December, the slowest since March 1994 and below the 16.4 per cent peak in December 2007.
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Australian businesses and consumers continue to reduce their debt as a consequence of the global economic slowdown, an economist says.

The value of personal, commercial and lease commitments fell in November, Australian Bureau of Statistics (ABS) data showed on Monday.

Lending for commercial purposes slumped 10.4 per cent in November, while personal financing was 1.8 per cent lower and lease finance was down three per cent for the month.
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Australians will still spend significantly on Christmas gifts but will be careful not to go into credit card debt during these tougher economic times, a survey finds.

Research by credit card checking company Veda Advantage shows that 26 per cent of Australians will spend as much as $1000 more on Christmas presents this season than they did last year.

The survey found that a further 32 per cent will spend the same amount on presents as last year.
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