When The Victorian Council of Social Service (VCOSS) learnt that the banks are still giving their clients hundred percent home loans it rang alarm bells for them in times when reality prices are falling very sharply. VCOSS believes that if there is another fall in prices in the housing industry then the buyers would be burdened with negative equity. According to VCOSS spokesman David Imber banks are literally dangling carrots in front of first time home buyers and people reeling under the constant pressure of rising rents in the private rental markets to borrow irresponsibly from the banks. In a property market that is diminishing it is foolish to borrow the full 100 percent of the purchase price when in reality with each day the cost of the house is falling. In such situations the individual does not have any protection but on the other hand the bank and financial institutions are covered by obligatory mortgage insurance.

VCOSS spokesman David Imber is of the opinion that the banks need to look into their lending policies and do much to reinforce their criterion. Mr Imber also says that it is the responsibility of the banks and financial institutions to demonstrate that they have great regard for the interest of the customer and have conscientious lending policies. Not just the banks and financial institutions need to be responsible but a major role has to played by the federal and state government to ensure the social responsibility for people with low income who cannot afford to borrow at a high interest rate. They will have to make sure they there is a more accessible borrowing policy in the housing market for them.

Broadmeadows Uniting Care’s financial councillor Gary Rothman says that banks are adopting desperate measures to attract buyer who are buying houses for the very first time and low income people. He says that today in places like Victoria one can see that there is a significant increase in clients going to financial councillors looking for 100% mortgages. Most of them can’t even afford the hundred percent mortgages. When people take loans that they can’t afford, it creates a situation where they are burdened with a heavy debt. This has also resulted in situations where these loans are defaulted. They are not able to pay back the loan or the interest in time stipulated time.

The situation also leads to the claims being refused by banks. The banks refute the allegations. The Australian Bankers' Association’s Chief Executive, David bell says that they give loan only after proper securitisation and they have made they are people with high income and can pay back the loans.  The percentage of defaulter is very low, unlike what VCOSS claims. It is only about 0.8 of one per cent of people who are ninety days in excess. The banks are not lending irresponsibly.