IN THE market for a home loan, but have no savings, a hefty debt and a below-average income?

Don't worry - with an income of $60,000, no savings and a $5000 credit card bill, the Herald was able to obtain pre-approval from more than half a dozen banks yesterday for a $250,000 loan.

None of the big banks refused our application - either arranging for a consultation or approving the loan in principle.

The largest amount offered was $291,000, which would have meant monthly repayments of $2240 - more than 70 per cent of our after-tax income. Almost two-thirds of this would be spent just paying off interest.

The offers came despite repeated warnings about lending practices that have led to widespread mortgage stress and high numbers of foreclosures in Sydney's west.

Dr Andy Marks, a researcher at St Vincent de Paul's financial counselling service, who deals with the fallout of easy credit, was shocked. He said he would not recommend anyone taking on a loan where repayments exceeded 33 per cent of net income.

He said this week's tripling of the first home owners grant to $21,000 for newly built homes - an 8.4 per cent deposit for a loan of $250,000 - meant people would be even less inclined to save before taking on a big mortgage.

"We're surprised by the willingness of many institutions to offer credit to people unable to manage the repayments with their income level," he said.

"I've had a case recently where a sole-parent family was offered a loan in excess of [the 70 per cent repayment-to-income] ratio."

A spokeswoman for the Aust-ralian Bankers Association said growth in the number of housing loans issued was the slowest for 22 years, and only 0.4 per cent of mortgagees were falling more than 90 days behind in repayments to banks.