The CEOs of the big banks are calling on the Federal Government to ease responsible lending rules put in place after the banking Royal Commission and aimed at protecting borrowers. But consumer groups are warning against changes as new data reveals the number of people in mortgage hardship is reaching crisis levels.
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TVTranscript
00:00What we're hearing from people who work for the National Debt Helpline is that
00:06one in four calls to that helpline so far this year have been about people
00:11facing mortgage hardship. Now not all of them are defaulting on their loans yet
00:16because what they typically do is they sacrifice other living expenses, so
00:21they'll go about missing meals or they'll not pay other bills, electricity
00:25bills, stuff like that in order to just keep paying the mortgage, but some of
00:29them are getting to the breaking point and some have been forced to sell their
00:33homes. What the big bank bosses are saying is that they're mainly taught,
00:38they're not being very specific, but they're alluding to two main regulations.
00:42One is the regulations that were introduced post the Banking Royal
00:46Commission, so that's when we saw all these horror stories emerging of people
00:50being lent to that shouldn't have got loans and ended up in financial strife.
00:54So those laws are part of the laws they're talking about that should be
00:57changed or they haven't been specific about how those laws could be
01:01eased. The other regulations that apply here are buffers that are placed when
01:07you try and get a loan. So when a bank assesses you on your ability to get a
01:12loan, they look at whether you can pay an interest rate that's 3% above the
01:17current interest rate. So what they're talking about here is potentially
01:21loosening or removing those buffers for people who are refinancing and possibly
01:25also for people who want to get a new home loan. Consumer groups are very
01:29worried. They don't want to see a repeat of what we saw during the Royal
01:32Commission times. They say the rules that we've got in place came because of
01:37all those problems. We don't want to revisit those problems. We have already
01:43a high number of cases coming to us about people in stress, and that's based
01:47on pretty stringent rules in place currently. So don't basically change the
01:51rules.