Consumers are being warned to avoid risky home loans that could see them or their families left homeless.
Consumer group CHOICE says risky lending practices that became extinct during the global financial crisis are re-emerging in the mortgage market.
That includes 40-year mortgages, family guarantees and no deposit and low deposit home loans, which are currently used by a third of all new borrowers.
CHOICE spokesman Tom Godfrey said these loans left little margin for changes in circumstances, like an interest rate hike or drop in income.
Family guarantees, which allow a borrower to use a family member's home as collateral, could see both the borrower and their relative lose their homes if repayments aren't met.
"We're only six years from when poor lending practices dropped us into the global financial crisis and now these loans seem to have found their way back into the mix," Mr Godfrey said.
"Whether it's a low deposit loan, 40-year loan or family guarantee, they're very high risk products and they can leave consumers in a great deal of financial distress.
"People have a very strong desire to get into the housing market and for those who don't have a deposit, their frustration is attracting them to these high risk products and that's a very concerning trend that we're starting to see."
The Australian Prudential Regulation Authority has previously expressed concern about relaxed lending practices.
In a 2013 report it warned lenders to ensure new borrowers were able to service debt and afford higher repayments when interest rates rose from current record low levels.
But Mr Godfrey said risky products were still being seen across the market, particularly among second-tier lenders.
Katherine Lane, principal solicitor at the Consumer Credit Legal Centre, said borrowers could face bankruptcy if they couldn't meet their repayments while family members who act as guarantors could lose their house too.
"The lenders can sell whichever house they want to so if one house is hard to sell, they'll want to sell the other and it's possible the guarantor could lose their home first," she said.
Australian Bankers' Association chief executive Steven Munchenberg said banks applied buffers to home loans when making lending decisions to ensure borrowers have the capacity to make repayments if rates rise.
Mortgage lender RAMS said it tried to minimise risks associated with its parent guarantor loans, adding that its product had existed for 10 years and RAMS had never defaulted on a guarantor's property.
"RAMS has extremely robust lending practices, for any loans, including its parent guarantor loans - which is just one option available for people who meet all of the credit criteria," a spokeswoman said.
"It is not in the interests of our customers or our business to write loans that can't be paid."
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