Borrowers

• Mortgages - Individuals

  Has lower interest rates as bank has home as collateral. If borrower defaults from loan repayments, the bank owns the property and can sell it tp regain debt before giving leftover to borrower
• Short-term Larger Purchases

  Do not exceed $30 000. They often have higher interest rates because they are higher risk to financial institutions
• Credit Cards


  Has high interests becuase they are often unsecured. There is no asset the financial institution can claim if borrower defaults on the loan
• HECS/HELP

  Borrowing money for an educational course where the amount owed only increases with inflation
• Business

  To expand production, businesses need access to funds. Equity is raised by issuing shares or indirectly borrowing from financial institutions. They will often need to borrow money for brief periods to overcome downturns in cashflow
• Government

  Borrow deliberately to make an effort to raise the level of economic activity. When economic growth rate is slow, governments may borrow money to increase spending of give tax cuts to stimulate economic activity. They may borrow money because spending unintentionally grows faster than revenue.