Government lifts consumer credit relief threshold

The Federal Government has moved to assist consumers in varying their credit contracts in the face of financial hardship by lifting the threshold to $500,000.

The Minister for Superannuation and Corporate Law, Senator Nick Sherry, has announced that the Government will be strengthening the regulation of consumer credit contracts in order to better assist consumers by significantly increasing the thresholds under which consumers can request a change to certain terms of their credit contract on the grounds of hardship or a postponement of enforcement proceedings.

“Front and centre of our national consumer credit protection regime will be a dramatic increase in the monetary thresholds under which consumers can get help if they are struggling with a mortgage,” Senator Sherry said.

The minister explained that the threshold to access the hardship arrangements was set according to a complex formula that capped the access point at 110 per cent of the average loan size for new dwellings in NSW as determined by the Australian Bureau of Statistics monthly. It is currently $312,400, but that is set to change again on May 12.

He said many Australian families might be missing out on the help the hardship provisions could provide – help that might keep people in their homes during challenging economic times.

“We don’t believe that either the current amount or the way it’s calculated is in the best interests of hard working families, so we’re increasing the threshold to $500,000,” Sherry said. ““This means if a home owner finds themself in financial hardship, they will be able to request help. That might be a change to certain terms of their credit contract on the grounds of hardship or a postponement of enforcement proceedings.”