The major banks and mortgage brokers are calling for regulations on lending to be wound back to make it easier to give people homes loans, but consumer groups say this is dangerous amid a spike in cases of mortgage hardship.
Is one solution to mortgage hardship making it easier for people to get a home loan? Mortgage brokers and the big banks think soThe horror stories of consumers in financial strife that emerged during the banking royal commission more than five years ago led to stronger regulations aimed at better protecting consumers, and caps on bonuses paid to bankers.
"Our view that it's the unintended consequence of that is that it is harder to get a home loan or a credit card in Australia or New Zealand today than it has been in 30 years," ANZ boss Shayne Elliott told investors in November last year. "Is that a society that we want … where people can't get a home loan or can't get a loan to start a business? That has consequences.""The challenge that I think we're seeing now is that the collective effect of all of that regulation, has added complexity and, in aggregate, has made it challenging for bank participants to serve the needs of lower income households," Mr Irvine told ABC radio's The World Today program.
"The point here as it's never just one specific regulation, it's the commingling of all regulations that make it harder for banks to lend."So what regulations are they talking about?More people looking to break into the property market are lying on their loan applications in desperation to try to secure a home loan, according to new data.
Mr Syed says buffers should be removed for people refinancing if they have a good history of repayments and lowered for those buying a new home. One in four calls this year to the National Debt Helpline have been from Australians who face mortgage hardship, including some who have been forced to sell their homes.
"It creates a culture of sales and a culture of really stretching the lines of the rules. And in the context of talk of easing responsible lending, I'm really concerned that what we're going to see is even more hardship on the National Debt Helpline as people cannot afford loans that they've been provided."Other consumer groups warn that even small tweaks to responsible lending laws could cause financial turmoil.
Arrears are still relatively low by historical levels. Data from APRA released for the December 2023 quarter shows as a share of credit outstanding, the proportion of mortgages 30-89 days past due is just 0.60 per cent. The latest ABS lending Indicators data released on Friday shows the banks still hold the lion's share of housing loans.
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