HECS debts could be deferred, and lending rules relaxed in a Coalition election pitch to make it easier for “aspirational” Australians to buy their first home.
According to media reports, the Coalition is examining loosening lending rules to make obtaining a mortgage more accessible for first-time homebuyers.
Andrew Bragg, who will lead the inquiry, said he wants to “tilt the scales in favour of first-time homebuyers” by making loan approvals easier.
One impediment in the Coalition’s firing line is “responsible lending” obligations put on banks following the Global Financial Crisis. Bragg claims they are too strict.
“Clearly the balance is wrong. We don’t want to weaken our banks, we want them to be unquestionably strong. But we also have to look at the objective of home ownership, which is the Australian dream”, he said.
“Responsible lending laws are horribly complex and duplicative”.
Bragg also said that the Coalition will consider whether HECS debts are a barrier to a home loan.
Abolishing responsible lending laws would further inflate property prices by pushing more credit into the system.
The Hayne Banking Royal Commission’s number one recommendation was for responsible lending rules to remain intact:
The Hayne Banking Royal Commission’s central recommendation was to keep responsible lending laws.
When will Australia’s politicians acknowledge that demand-side measures like those proposed above are self-defeating and will worsen housing affordability?
Australia has experienced more than twenty years of demand-side “affordability” measures, which have helped drive prices higher.
Throwing more credit at the affordability problem will only worsen the situation, increase household debt, and erode financial stability.
