CTU MEDIA RELEASE
17 September 2007

Rising concern about banks encouraging unsustainable debt – CTU

The Council of Trade Unions is supporting Finsec, the finance and banking sector union, in their criticism today of new targets for BNZ staff.

Peter Conway, CTU Economist said that apart from the additional pressure on workers, there are also concerns about pay systems which can encourage customers to take on more and more debt.

“This not only adds to house price inflation, but also runs the risk that customers may not be able to sustain such high levels of debt. At a time when there is renewed focus around the world on financial instability caused in part by high debt levels of some home owners, we need to be careful about this,” he said.

Five years ago, it took 44.8% of average take-home pay to make a mortgage payment on a median house. Today it takes 80.8%.

The proportion paying out more than 40% of household net income in mortgage payments has increased to 11% of those with a mortgage.

“In this environment, there are clear risks in encouraging even more debt,” Peter Conway said.

ENDS

© Scoop Media