Banking Royal Commission
Both Shelter WA and The Financial Counsellors' Association of WA have welcomed a push for tighter affordability checks when it comes to approving home loans.
The Financial Services Royal Commission (Hayne Inquiry) took lenders to task over their lack of responsible lending practices with their home loans, car loans and credit cards.
Bev Jowle, Executive Officer of the Financial Counsellors' Association (FCA) of WA heard about the practices first-hand.
“Our financial counsellors have told me that some banks would underestimate the number of dependents a family might have or reduce their cost of living expenses just to get a loan across the line,” Ms Jowle said.
“This meant people could borrow beyond their means when they could have gone for a lesser priced property the would have been able to afford, but the bank and mortgage brokers would push it so people would borrow a little bit more.”
Last year large numbers of National Australia Bank home loan applications were found to have deliberately under-reported customers’ living expenses.
Michelle Mackenzie, Chief Executive Officer of Shelter WA, the State's peak housing policy and advocacy body says the practices of the banks and mortgage brokers have pushed people into housing stress.
“If responsible lending laws were complied with many people would have a mortgage they could afford,” Ms Mackenzie said.
“Housing stress influences a whole range of non-housing outcomes, including workforce participation; access to jobs and services; health; social participation, family stability and educational outcomes. It can lead to homelessness.
Access to housing finance is critical for a housing market. So too is focusing on better consumer outcomes and restoring trust in lending practices, said Michelle.
Since the recommendations of the inquiry were handed down some reports have suggested customers will now be unable to secure a mortgage.
“We would argue people will still get mortgages, but they will be at a rate that people can afford rather than being overly extended,” Ms Jowle said.
In the last three months of 2018, more than 9,000 calls were made to the financial advice helpline in WA. In the same period only NSW (10,800) received a higher number of calls nationally with VIC receiving 8,000 and QLD receiving 7,400 respectively.
“One day last week we had 137 calls in one day,” explained Ms Jowle.
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