What effect has the global economic slowdown had on the credit and collection industry in your region of the world? by ProQuest

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									                  global focus


                           What effect has the global economic slowdown had on the credit
                           and collection industry in your region of the world?

                           The depressing news from around the world                      Credit is more difficult to obtain with tighter risk
                           continues to weigh heavily on the Australian                   evaluation. There is less money available due to
                           economy, but until recently there have not been                the difficulties faced by the banking sector,
                           significant measurable consequences. Australia’s               particularly in the home loans sector—with a
                           banks have fared extremely well and have not been              typical loan-to-value criteria of 75 percent, this has
                           exposed to the “toxic loans” scenario faced across             been compounded by 25 percent to 30 percent
                           the United States, the United Kingdom and                      devaluation in house prices.
                           Europe. That said, the slowdown for Australian
                           raw material exports that has been caused by the               Credit card companies have tightened their
                           change in economic circumstances elsewhere has                 lending and in some cases have raised their interest
Paul Cooney
                           begun having an affect on Australia, and the                   rates, even though the bank base rate is .5 percent.
                           economy has slowed, unemployment has begun to                  Debt recovery agencies are experiencing greater
                           rise and collection activity has decreased.                    volumes, but maybe not as much as might have
                                                                                          been expected. Collections are definitely more
                           The impact of these changes is not dissimilar to               difficult, with more consumers opting for
                           that being experienced elsewhere in the world.                 repayment arrangements over the longer term
                           However, because our unemployment has lagged                   rather than settling immediately.
                           behind the losses that have occurred elsewhere,
                           some of the drivers have remained solid for longer.            More worrying is the frail position of some larger
                           There is an increase in the volume of work being               agencies and debt buying operations as their
                           referred to agencies across the country and an                 holding companies find the difficult economic
Paulson Lum                increase in the number of accounts being offered               climate and lack of funding is slowing down the
                           for sale. Recovery rates are beginning to slow, but            momentum. As a result, debt buying prices have
    
								
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