Banks say lower lending criteria will get more people into first homes as others raise debt fears

Some consumer rights groups say discussions about banks increasing the flexibility of mortgage lending criteria are dangerous and changes could end up sending people into debt. Photograph: Bloomberg/Getty Images

Consumer rights groups have warned against calls to lower the interest rate test for first home buyers, describing it as “a lazy policy idea” that puts all the risk on people who can least afford to manage it.

On Thursday the Australian banking lobby told the Senate inquiry into financial regulatory framework and home ownership that greater flexibility assessing applicants could help more people safely access credit.