4 June 2014: Recent reports have shown a financial spectre looming over the land that many Australians are blissfully unaware of, that may cause untold problems in the future. It’s our old friend (or should that be unwelcome housemate) called household debt. Recent figures show that we Australians owe a staggering $1.8 trillion to banks and other lenders. According to an ABC News report published on the 8 May 2014, this is the highest level since 1988 and the equivalent of $80,000 per person.

This black hole appears to be unstoppable in its growth and has now become one of the highest in the developed world, weighing in at 1.8 times household disposable income, according to David Skutenko from the Australian Bureau of Statistics.

This is reported as ranking amongst the highest in the developed world, and gives Australia the dubious distinction of having a personal debt level that’s higher than both the US (1.1 times household disposable income) and the UK (1.5 times household disposable income).

To those sharing this debt, the recent decision by the Reserve Bank's decision to hold the official interest rate at 2.5 per cent could look like a lifeline being thrown in times of need. Yet this figure could unwittingly turn into exactly the opposite as worrying new trends see some lenders take advantage of this rate to pile more weight on borrowers.

These are the household lenders who, driven by the low interest rates and a drop in borrowing levels, are offering householders products that allow them to get a mortgage with lower deposits, borrow up to 120 percent of the value of their homes or spread their loan over 40 years.

Though initially attractive, these products could prove problematic to borrowers if interest rates rise again, or the householder loses their job or falls ill.

The ABC News report also quoted Tom Godfrey from consumer group Choice, who thinks that these offers mark a big shift in risk-taking behaviour by lenders from the caution exercised after the financial crisis.

"During the global financial crisis people were hard pressed to get a home loan approval unless they had a significant deposit. Now RAMS is offering a low-deposit loan combined with a guarantee that allows you to borrow a staggering 120 per cent of the value of your home," he said in a statement quoted in the report.

"Worryingly, there has been a strong demand for these high-risk loans with one-in-three new home loan borrowers putting up less than the 20 per cent normally required."

Choice also stated that they think 40-year loans are the most worrying innovation in home lending, leaving home buyers even more vulnerable to rising interest rates.

"The difference between a 30 and 40-year loan on a $300,000 home is $140,800 in extra interest [over the life of the loan]. Repayments are only $4.88 per day more for a 30-year loan, the equivalent Mr Godfrey added.

"The average interest rate for standard home loans over the last 20 years has been 7.6 per cent compared to 5.9 per cent today. Just be prepared for rates to go up."