Proposed federal government reforms to responsible lending obligations will help make home ownership more accessible for Australians, mortgage aggregator Finsure Group said.
Finsure managing director John Kolenda welcomed the government’s plans to free up credit to boost the economy.
Mr Kolenda said that the proposed changes announced by Treasurer Josh Frydenberg were in response to concerns restrictive rules on credit and duplication of regulation in home and personal lending were curbing the recovery from the COVID-19 recession.
“The lending landscape, particularly since the Hayne royal commission, has been highly restrictive, complicated and confusing with tighter lending regimes and forensic examination of borrower expenses significantly reducing borrowing power for consumers,” he explained.
The proposed lending reforms still have to be passed by Parliament and are not due to come into effect until March 2021.
Moving forward, mortgage brokers would continue to play an important role in helping qualified borrowers obtain finance, according to Mr Kolenda.
Mortgage brokers will operate from 1 January 2021 under a best interests duty (BID), which is a higher duty of care towards consumers than responsible lending.
“Best interests duty reinforces the good practices that most in our industry already follow, and one important aspect to illustrate is that it clearly differentiates brokers from the banks,” he said.
“The only way a consumer can guarantee their best interests is the number one priority to speak to an experienced finance broker. Brokers have been pivotal in introducing stronger competition in the lending market and giving customers choice.”