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APRA warns banks about 'disconcerting' credit assessments

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Australian Broker | 15 May 2015, 07:28 AM Agree 0
APRA concerned about the rigour of banks when conducting credit assessments for home loans, after the results of a hypothetical borrower survey were 'disconcerting'
  • Greg Reid | 15 May 2015, 09:26 AM Agree 0
    It should stagger me that APRA (read most corporate regulators) are so out of touch that they come up with suddenly being enlightened for a practice that has existed for many years, but unfortunately it does not. Lenders target different market segments to suit their own needs and books, so should have different criteria. If they were all the same criteria, what would differentiate them other than price?

    They can change regulations like wanting specific living expenses, but how many people would know what their living expenses are? Regulation is fine but in practice, can it work?

    Where have these regulators been living the last two decades or more? Perhaps not in the real world.
  • john | 15 May 2015, 09:30 AM Agree 0
    Idiots.... higher min cost of living based on you earning more??? Serving interest only on 25 years plenty of lenders do but the rationale for serving on 30 makes plenty of sense.

    God Government employees justifying their pay packets as usual.
  • Tom | 15 May 2015, 09:38 AM Agree 0
    Now these comments would seem to support what we brokers have been saying for ages, that the internal lending processes are significantly lower then the ones we are subjected to.

    Perhaps it's time each bank lending staff member had to be compliant with NCCP guidelines.

    I know I've lost a couple of deals directly to the banks because I asked clients to sign the Compliance docs before taking an application.

    They thought I was was scamming them because they'd been pre-approved by the banks and compliance was never mentioned! Let alone having to sign some forms!!
  • Dave Robinson | 15 May 2015, 10:09 AM Agree 0
    So the most Mr Byres can do is warn them! No wonder the banks are untouchable.
  • Papery | 15 May 2015, 10:20 AM Agree 0
    1. The average life of a home/inv loan is about 5 years...not 25 nor 30....3-5yrs is the horizon that most people plan for

    2. Most people are grown up enough to adjust to changing circumstances, like changing marital status, growing & contracting family APRA aware of the divorce/separation rates.

    3.Most people dont stay in the same job for long these days...they get retrenched, they quit & look for jobs to suit lifestyle sometimes for more money/hours, sometimes for less. They go back to study.

    4.Most people understand the commitment of a mortgage & that if you dont pay your mortgage, your home will be repossesed & sold out from underneath you. Most people will make the decision to sell before they are forced into it.

    5. Most people priorotise the direct costs of shelter/food/transport & then other stuff.... living expenses is a mostly subjective amount & people will spend what they are able to spend.

    I want to know why are we & our mostly intelligent clients being put through all these compliance test to ensure our clients are not at a disadvantage when by the very definition of what APRA does, does just that...disadvantage & prejudice borrowers for what they realistically want & need now; not hypothetically in 25 years or even 10 years time.
  • Maria Rigoni | 15 May 2015, 10:23 AM Agree 0
    Well APRA have confirmed what we already gathered... they are not bankers and do not understanding lending... one lender's policy can change from easy assessment to stringent assessment in the blink of an eye... "reasonable inquiry" can lead to gestapo like interrogation... and the majority of loans taken out over 30 years do not last the distance... even if they did money inflates year by year so financial position is never static
  • Chris Szigeti | 15 May 2015, 11:18 AM Agree 0
    Tom your comments are valid - no doubt there are two sets of guidelines - one for us brokers and another for the bank branches. Yes time for all bank staff to be NCCP compliant within reason.
  • Really | 15 May 2015, 02:09 PM Agree 0
    What 'papery' & 'Maria' said.
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