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Lenders unfairly blamed for consumer irresponsibility

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Australian Broker | 11 Jun 2013, 06:00 AM Agree 0
The way home load affordability is decided in Australia is 'ridiculous' and it's 'all too easy' to blame lenders when things go wrong, according to one industry representative
  • Country Broker | 11 Jun 2013, 10:09 AM Agree 0
    This is a good article , If brokers are doing what they are required to do under the NCCP , and take just reasonable steps in investigating a clients situation, clients capacity should be assessed , I have had a number of instances when it is obvious that the capacity is not there.
    I also agree the clients still need to take responsibility , it is just too easy for a borrower to "point the finger
  • Randy in WA | 11 Jun 2013, 11:19 AM Agree 0
    Great stuff Honey Loans!

    ...there's only so much 'validation' a lender can do - if all liabilities are disclosed by the borrower, then the serviceability checks etc will give a good indication of the borrowers ability to repay

    ...the only thing I'd say is the living allowance apportioned in the servicing calculators of most lenders are quite conservative ...these are generally based on the HEM index, but try living a reasonable lifestyle (as a couple with 2 kids) on $2704 per month, when electricity, gas & water alone can cost >$500 per month!

    ... changes to circumstances, undisclosed debts or lifestyle spending is not something a lender or broker can easily determine, and hence end responsibility should be held by the borrower (whilst recognising that industry legislation to prevent misleading borrowers is healthy for the professionalism of the industry)
  • Brado | 11 Jun 2013, 11:33 AM Agree 0
    Part of our Needs Analysis specifically asks how much the client can afford to repay without hardship ( based on repayments per week etc )... I think its SO important that the client still takes responsibility for what they are doing and what they are signing up for.
  • Papery | 12 Jun 2013, 11:11 AM Agree 0
    Being a Lender/Broker for way too many years now I cant tell you how many people will tell you in no uncertain terms that they can afford way more than any Lender will approve & with applicants prepared to say & (not disclose) whatever they can to secure the finance they THINK they can afford.....especially in a low interest rate climate. With job security & confidence at all time lows, the cost of living continuing to spiral out of control, not to mention the questionable property market (bubble or no bubble) it is up to Brokers & Lenders to properly qualify appliciants & if the deal is weak, then maybe its better to decline up front then put marginal borrowers thru future hardship & arrears processes not to mention screw up their future credit ratings. Sometimes good medicine is hard to take, but better for you in the long run.
    BTW theres a reason why Australian arrears rates are as low as they are...for the most part thorough due diligence processes are in place & for the most part work.
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