Treasurer calls for “sensible balance” in lending regulation

by Madison Utley27 Sep 2019

A mortgage brokerage has welcomed and affirmed the sentiment yesterday expressed by Treasurer Josh Frydenberg that “hard-working families” are being negatively impacted by stricter responsible lending rules.

Aussie Home Loans CEO James Symond said, “We are concerned about customers being knocked back on home loan applications due to stringent interpretations of rules by APRA and ASIC.”

According to Symond, there is cause for concern over the low property listings and the downturn in construction activity, despite historically low interest rates, the likelihood they will continue to fall and auction clearance rates picking up.

Speaking at The Australian Financial Review’s Property Summit in Sydney yesterday, Frydenberg welcomed the increase in housing prices and linked the stabilisation in the housing sector to the easing of lending regulations -- measures, he emphasised, that “at the time achieved their desired objectives” through mitigating risks associated with investor loans, interest-only lending and serviceability.

Speaking of responsible lending, Frydenberg said, “While these obligations were first legislated back in 2009, the shadow of the Royal Commission and recent litigation has given rise to uncertainty as to how they ought to be implemented in practice.”

“Common sense dictates that a sensible balance needs to be struck because an unduly restrictive application of these obligations can do as much harm as an overly lax one.

“Should responsible lending laws be applied too stringently, they will also negatively impact consumer behaviour with consumers more likely to remain with their current provider than go through the red tape burden associated with looking for alternatives.

“It is in everyone’s interest that the aspirations of hard working families are not collateral damage in this regulatory process.”

A recent study commissioned by Aussie revealed an overwhelming lack of consumer confidence both in the housing market and in their prospects of securing a home loan.

Just one-third of Australians are more confident about buying a home than they were five years ago, despite record low interest rates and lower property prices.

The study also found 70% described the home loan process negatively, calling it ‘stressful’, ‘a waiting game,’ ‘overwhelming,’ ‘confusing,’ ‘difficult,’ ‘painstaking’ and ‘rigid.’

Further, about 29% of Australians are waiting to buy property despite promising market conditions as the home loan process has been described as hard to navigate and riddled with red tape.

“This is why it is so important for the regulators to act to restore Australians’ confidence in the housing market and their ability to buy property,” said Symond.