ASIC today launched an update to its report 493 on interest-only home loans.
The key take-away from this update is that its targeted industry review of home loan providers has completed, and key findings were as follows:
- That borrowers were more likely to obtain an Interest-only loan when using a broker (although, it is worth noting that the last time ASIC released similar data, they did not factor in that brokers were more likely to submit ANY kind of loan, whether IO or P&I).
- That borrowers approaching retirement age are provided with a significant number of interest only owner occupier loans. Remember, this itself as fine, as long as you clearly document an exit strategy that is clearly explained to your client.
ASIC is now moving to the next stage of its review, which will look at individual loan files from both lenders AND mortgage brokers, so now is a great time to make sure you are on top of your responsible lending compliance documentation. Don't forget that QED Complifast now have an independent file audit feature, so if you want a fresh set of eyes to review your loan files and to receive a report of the compiled report just log into complifast and use the 'MY QED File Audits' feature.
Finally, ASIC has taken the time to remind brokers that while IO loans can be reasonable, appropriate enquiries need to be made as to the appropriateness of the IO option, but more importantly the broker needs to be able to DEMONSTRATE that these enquiries have taken place. Of course, if you are a CompliFast subscriber you would regularly answer questions as part of your quarterly review to confirm you look at this during IO lending so you are well ahead of the game already.
For more information, view ASIC media release 17-341 or contact our office on 1300 817 662 option 1