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Credit Ombudsman warns borrowers are 'stretching themselves too far'

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Australian Broker | 23 Oct 2013, 07:00 AM Agree 0
COSL Credit Ombudsman, Raj Venga, says a third of complaints received by the service are about mortgage stress
  • not so old broker | 23 Oct 2013, 09:09 AM Agree 0
    But Raj, you forget that profit is king, not prudent lending or responsible lending. Now let's sit back and wait for the backlash from lenders and others telling you to butt out.
  • overtheborderbroker | 23 Oct 2013, 09:38 AM Agree 0
    COSL's warning should be heeded as it's the broker in a few years time who will get the first call when rates go back up to the high six percents and borrowers can't pay, and it's the broker who will go through an agonising COSL investigation process to clear their name. I still service my loans at 6.5% plus a 2% margin and make it clear to my borrowers that this is what I do and why I do it. If they don't like the answer they can go elsewhere. Interestingly once I have explained why I do this, I don't lose too many deals. PS If you have never had the dreaded email from COSL let me tell you, you don't want to. In all my years of business I have had one COSL complaint that took three years to finalise. I never want to receive an email from COSL again other than my annual renewal.
  • Noel | 23 Oct 2013, 10:12 AM Agree 0
    Everyone knows that the lenders serviceability claculators are a joke. Get real and service each loan to each individual applicants own circumstances.
  • Phil in Finance | 23 Oct 2013, 12:01 PM Agree 0
    I personally agree with ING's use of a "floor rate" of 8% for serviceability. It has probably cost them business from marginal borrowers, however.

    The issue for brokers is; if it is within a bank's current policy and they approve the loan, does a client then have the right to complain to COSL about the broker when rates increase??

    I have seen clients claim "hardship" (luckily not to COSL) when the rates are now lower because they took on lots more debt (credit cards and car loans) after the home loan was approved and are now overcommited!!
  • mac | 23 Oct 2013, 12:15 PM Agree 0
    what about the people who can easily service more debt than the lenders calcs attest to? Ie most investors with a portfolio with I.O. repayments and claiming depreciation. 8% pa is just not real! Rates will not go back up there for a very long time. They cant because there is too much stress out there. How about different stress testes for different borrowers like I do in my preliminary assessment. Why are they servicing 65% LVR investment debt over 25 years P & I at 8% when the client is on 4.85% IO and will keep rolling the IO over. Don't start with it has to be paid back at some time, the most successful long term investors I have seen don't do this!
  • Papery | 23 Oct 2013, 01:11 PM Agree 0
    Investors may be enjoying 'surging house prices & a housing frenzy'...first home buyers & renters not so much....any investor that gets into hardship...SELL THE ASSET....oh wait ..dont do that...the property market ONLY EVER GOES UP right..thats what the marketeer told me & now I can blame the broker for getting me over committed with a loan facility that included a capitiised interest strategy (that I dont think I really understood). didnt the marketeer also say the tax man & tennant will pay for my asset that will only ever increase in value.

    Lets face it, the old adage of Greed is Good, is still alive & well today.
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