Access to finance is set to get easier, with a suite of reforms to be introduced by the federal government to help first homebuyers get into the property market and investors to bolster their portfolios.
Treasurer Josh Frydenberg today announced the government would move away from the ‘one size fit…
Access to finance is set to get easier, with a suite of reforms to be introduced by the federal government to help first homebuyers get into the property market and investors to bolster their portfolios.
Treasurer Josh Frydenberg today announced the government would move away from the ‘one size fit…
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Access to finance is set to get easier, with a suite of reforms to be introduced by the federal government to help first homebuyers get into the property market and investors to bolster their portfolios.
Treasurer Josh Frydenberg today announced the government would move away from the ‘one size fits all’ approach that has been in place for several years, saying obtaining housing finance had become: “overly prescriptive, complex and unnecessarily onerous”.
Responsible lending obligations will soon be removed from the National Consumer Protection Act, with lenders to be allowed to rely on information provided by borrowers.
Other changes include removing the ambiguity regarding the application of consumer lending laws to small business lending, while lenders will need to continue to comply with APRA standards.
“The changes will make it easier for the majority of Australians and small businesses to access credit, reduce red tape, improve competition and ensure that the strongest consumer protections are targeted at the most vulnerable Australians,” Mr Frydenberg said in a statement.
“The government will consult publicly with stakeholders before finalising the legislation required to implement the reforms.”
Housing Industry Association managing director Graham Wolfe said the move was necessary and would help steer Australia out of the economic issues associated with the pandemic.
“HIA has repeatedly called for better access to finance and a relaxation of the rules around home loans,” Mr Wolfe said.
“Access to finance and lending practices of banks is the biggest problem identified by builders in a survey undertaken by HIA in August - not COVID
“It’s a pity that it has taken a recession for these rules to change, this plan does not solve all the problems around access to finance and credit however HIA believes it is a move in the right direction.”
Mr Wolfe said the support already provided by the federal government through HomeBuilder and the First Home Loan deposit scheme would provide the incentive needed for people to buy a new home.
“Today’s announcement will allow banks to work with customers to ensure they get into a home faster,” Mr Wolfe said.
“Easing access to finance pulled us out of the 1990s recession and it will do the same now.
“Banks will still have to maintain appropriate application procedures and there is a mutual responsibility on the customer to supply accurate and truthful information when applying for a loan.
“HIA is pleased that the government is moving to address one of the main thorns in the side of potential homeowners, it’s a step forward for homeownership and a step forward for our recovering economy.”
Aus Property Professionals managing director Lloyd Edge, however, warned that the changes could potentially lead to people having trouble with credit.
“This will also help house prices to increase as it will be easier to obtain credit to buy a home, but potentially in the long run there could be more mortgagee sales/repossessions,” Mr Edge said.
“I do think that banks should not be held 100 per cent responsible if people can’t pay their loans and borrowers need some accountability so from that perspective it could be ok but there needs to be a middle ground.”
