ASIC Orders Banks to Relax Rules That Restricted Older People From Borrowing

IN A positive move for middle-aged and older Australians, the Australian Securities and Investment Commission has ordered banks to relax rules that restricted borrowing capacity.

On April 23 ASIC announced it clarified responsible lending guidelines introduced in January – which inadvertently resulted in banks and non-bank lenders being rejected credit applications from middle aged people without a substantial retirement egg.

ASIC now says lenders must ask more questions to determine whether a middle aged applicant will be able to repay a 25-year owner occupier mortgage loan, if they are due, for example, to retire in the next decade.

Commissioner Peter Boxall said some lenders were “adopting an unnecessarily restrictive approach to meeting the responsible lending requirements” adding ASIC was concerned by “reports of older borrowers whose employment will reduce, or cease, before the end of the loan term being refused loans”.