Home loan customers may be able to borrow up to $70,000 more under changes to the consumer credit laws, says Canstar group executive of financial services Steve Mickenbecker.
The changes would see banks revert to a more relaxed approach to living expenses when assessing a loan. There would also be less paperwork, speeding up the time it takes to have a loan approved. Based on an average income of $80,000 and a 20% deposit, a residential property buyer could potentially borrow $510,000 rather than $440,000, says Mickenbecker.
During the Hayne Enquiry into the finance sector, the banks were castigated for their methods in assessing a client’s ability to repay a loan, relying on simplified approaches rather than a thorough investigation. The latest changes are designed to protect consumers against taking on a debt they cannot afford while providing credit into the economy at a critical time.
The changes would put upwards pressure on house prices by creating more demand.