Relaxed rules around property loans are expected to help thousands of Australians get into their first home sooner.
However, Labor has warned despite the benefits of more people being to be able to access finance, the government must ensure lending is responsible and Australians don’t get in over their heads.
Treasurer Josh Frydenberg announced new rules on Sept 25, earmarked to start in March 2021 if parliament gives them the nod, under which lenders will be able to rely on borrower-provided information unless there are reasonable grounds to suspect it is unreliable.
Borrowers will be made more accountable for providing accurate information to inform lending decisions, replacing the “lender beware” rules with a “borrower responsibility” principle.
Frydenberg say it is essential more credit is made available to boost the economy, which has been kicked into recession by the coronavirus pandemic.
Housing Industry Association managing director Graham Wolfe says access to finance and banks’ lending practices are the biggest hurdles to home ownership.
“This plan does not solve all the problems around access to finance and credit, however HIA believes it is a move in right direction,” he said.
“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.”
Shadow treasurer Jim Chalmers says the coalition government has form when it comes to siding with banks and shonky lenders.
“The (financial services) royal commission recommended that these protections not be wound back or watered down - we need to take that recommendation seriously,” he said.
“We want to make sure that people who have the capacity to pay loans back get access to finance.
“But equally we need to make sure that people don’t get in over their head, don’t find themselves in a debt trap.”
Private house sales rose 3.6 percent in August and sales for the three months to August were up 36.5 percent on a year ago.
In the first half of September home prices in the five mainland states were down 0.2 percent compared with the end of August.
