ASIC has provided new guidance to preclude lenders from discriminating against borrowers on the basis of age.
With some industry pundits predicting NCCP regulations could potentially shut over-55s out of the borrowing market, ASIC commissioner Peter Boxall has said lenders should not take a restrictive approach to older borrowers.
'We are concerned by reports of older borrowers whose employment will reduce, or cease, before the end of the loan term, being refused loans because some lenders are adopting an unnecessarily restrictive approach to meeting the responsible lending requirements," Boxall said.
Boxall commented that older borrowers often have a variety of assets other than those from employment which could be used to service a mortgage.
"Undertaking the range of enquiries required by the legislation will often reveal other ways that they will be able to repay the loan," he commented.
In response to the issue, ASIC has updated RG 209 to include clarification that reasonbable enquiries into a borrower's financial situation can reveal other means by which a loan can be serviced, even when there is no continued income stream. It has also provided new guidance on issues which should be considered by lenders when assessing a borrower's ability to repay a loan. Boxall said responsible lending should not keep people from securing housing finance on the basis of age.
"The new responsible lending requirements in the National Credit Act are an important protection for consumers, but they should not be an inflexible barrier to credit for any segment of the population, and should not prevent consumers obtaining credit that they can reasonably afford," Boxall commented.
(Source: By Adam Smith | 1/04/2011 www.brokernews.com.au)
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