Landmark case
An interesting chart from the Reserve Bank of Australia today, showing the dramatic easing of funding costs.
Mortgage rates are now available from under 3 per cent for some borrowers.
Critically, ASIC has lost its landmark case with Westpac on responsible lending.
The judge summed the case up perfectly.
Writing a 25 to 30 year mortgage is about knowing whether a borrower has the capacity to change their spending habits after they've bought a home.
I'd never have got a mortgage otherwise: casting my mind back when I lived in Bondi eating out was virtually a 7 days per week event!
After buying a home that dropped significantly, but I was never remotely close to getting into arrears, let alone defaulting on my mortgage.
The banks' line-by-line analysis of household expenses has done very little to reduce risk in the housing market (if anything it has added risk due to the complexity and uncertainty, in my opinion).
If anything spending on takeaway coffee and Uber Eats is a sign of someone with more fat in their household budget, not less!
Moreover, how could lending be irresponsible when borrowers were being stress-tested for a dozen or more immediate and permanent (and imaginary) interest rate hikes, with no commensurate change in their incomes?
If anything spending on takeaway coffee and Uber Eats is a sign of someone with more fat in their household budget, not less!
Moreover, how could lending be irresponsible when borrowers were being stress-tested for a dozen or more immediate and permanent (and imaginary) interest rate hikes, with no commensurate change in their incomes?
