This article is from the Australian Property Journal archive
THE corporate regulator is seeking to update its guidance on responsible lending, the first review since the law was introduced in 2010, as a result of the recent banking royal commission.
ASIC commissioner Sean Hughes said although the laws have not changed since 2010, it is timely to review and update the guidance, to consider whether it remains effective, identify changes and additions that may help lenders better comply with their responsible lending obligations.
“The responsible lending obligations are an integral part of the regulatory framework for all consumer loans.
“ASIC wants to ensure its guidance provides industry with certainty, including as a result of emerging technology and initiatives such as open banking and comprehensive credit reporting. We encourage everybody to participate in this extensive consultation process,” Hughes said.
The consultation is open for a period of three months, with comments due by Monday 20 May 2019.
The ASIC review comes as banks continue to tighten credit, as economists warned that the “full effect of tighter lending conditions on houses prices hasn’t been felt yet”.
Australian Bureau of Statistics figures released this week shows new lending commitments for investment property plummeted by 27.8% year-on-year, and by 16.2% for owner occupiers.
Seasonally adjusted, total lending to households came in $32.025 billion. There was a 5.9% decrease in December to $17.387 billion lending to households for dwellings, excluding refinancing, for a 19.8% annual drop.
NAB chief economist, Alan Oster warned that dwelling investment is expected to fall by almost 20% over the next two years.
ABS data showed the number of new lending commitments to owner occupiers was down 6.4% over December, and 4.6% for investment dwellings, for a combined 4.4% fall. That followed a drop of 2.4% in November.
“The slowdown in lending for investor dwellings this month continues the steady decline over the past two years, with the value of new investor loan commitments down around 40 percent from the peak at the start of 2017,” ABS chief economist, Bruce Hockman said.
“The slowdown in lending for owner occupier dwellings is more recent, with falls concentrated in the last half of 2018.”
The number of loans to owner occupier first home buyers was down by 12.6% year-on-year, while loans to owner occupier non-first home buyers fell 15.5%.
Tasmania’s 4.2% growth in the value of lending for owner occupier dwellings over December was the only increase across the country. Values fell in New South Wales (by 6.1%), Victoria (6.6%), Queensland (9.9%), Western Australia (6.3%), the Australian Capital Territory (4.9%), the Northern Territory (18.3%) and South Australia (1.0%).
Australian Property Journal
