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Both Kevin Canavan and Jason Hannagan were caught out by what is known in banking as the “household expenditure measure,” or the HEM. If you have a loan, chances are yours is based on it, too. About three-quarters of loans are.

It is a tool financial institutions use to calculate your monthly expenses, but it was never meant to reflect what you actually spent. It was designed to work out the bare minimum you can survive on.

The lower your expenses are on paper, the more money the bank will lend you – even if you can’t afford it.

But it is also supposed to be a red flag. If your expenses are lower than the HEM, the bank should be asking: why?

ELIZABETH SHEEDY, RESEARCHER, MACQUARIE UNIVERSITY: When it comes to lending, of course you can pump out lots and lots of loans and you can make good short-term profits.