In a win for Aussie homeowners, Treasurer Josh Frydenberg has recently announced that as part of the Morrison Government’s economic recovery plan, consumers and businesses will be able to access credit faster and more cheaply.
The Treasurer said, “Credit is the lifeblood of the Australian economy, with billions of dollars in new credit extended to households and businesses in Australia each month.
“Now more than ever, it is critical that unnecessary barriers to accessing credit are removed so that consumers can continue to spend, and businesses can invest and create jobs.”
The restrictions on the lending landscape began a decade ago during the Global Financial Crisis, with even harsher limits introduced in the wake of the Hayne Banking Royal Commission. The Treasurer continued, “The Government will simplify the system by moving away from a “one-size-fits-all” approach while at the same time strengthening consumer protections for those that need it.”
While the proposed lending reforms must be passed by Parliament and are not due to come into effect until March 2021, borrowers should not expect a financial free-for-all, said Craig Betalli, Senior Finance Specialist, Our Broker.
“With the reduction of the compliance obligations under responsible lending rules and in an increasingly complex lending environment, borrowers are deserting the banks in more significant numbers and will progressively look to brokers for guidance, education and choice.
“As a broker, we can better cater to their individual needs.”
Older borrowers and small business owners will benefit
The Federal Government’s move will also help relax lending laws that made it increasingly difficult for lenders to approve mortgages for older borrowers and those with more complex lending needs such as investors and small business owners.
“The pressure created by the Hayne royal commission has led to the banks applying the most stringent interpretation of the legislation, which has now excluded any assessment of an individual’s special needs,” Craig explained.
The stringent lending environment has also made it harder for SMEs to secure finance, especially if they are using their homes as equity.
Craig said, “The current regulations have limited the flow of capital for SMEs and restricted their growth. So, hopefully, the removal of these regulations will free up commercial funding for new business and help the economy recover from COVID-19 restrictions.”
To find out how the proposed Federal Government reforms to responsible lending obligations could affect your homeownership or business goals, contact Our Broker on 1800 913 677.