Since then debate has raged over whether this is a smart move to help Australia’s post pandemic recovery – or whether this will lead to a dangerous credit binge.
The changes will effectively shift the onus of responsibility from banks to buyers to make sure they can afford their loan repayments. Banks will still need to do their checks and balances, but with less detail.
The responsible lending laws were introduced after the global financial crisis in 2009 and applied a layer of scrutiny to assessing a borrower’s income and expenses.
The laws are proposed to be wound back from 1 March 2021, and as Yahoo Finance reports, Treasurer Josh Frydenberg says this will “enable the lending to take place without borrowers having to provide their Uber Eats slips and their Netflix subscriptions”.
Easier home loan application processes will no doubt be welcome relief for many house hunters.
But is there a downside to buyers?
“With these proposed changes, banks can now lend money more easily. At the same time, the onus will shift to borrowers to make sure they are educated and understand what they are applying for,” financial advisor Ray Jaramis told Yahoo Finance.
“My cardinal rule is to do your homework and get good advice before taking on a loan.”
In other words, you still need to be all over your Netflex and Uber Eats expenses – but your bank won’t have to be.