Borrow
Responsible lending rollback won’t boost lending activity
The rollback of Australia’s responsible lending laws will make little difference to the borrowing habits – and borrowing power – of individuals and businesses, according to an expert in the space.

Responsible lending rollback won’t boost lending activity
The rollback of Australia’s responsible lending laws will make little difference to the borrowing habits – and borrowing power – of individuals and businesses, according to an expert in the space.

CEO and founder of debt and wealth management advisory DG Institute, Dominique Grubisa, has forecast that the deregulation of borrowing laws will not boost the economy as is hoped.
“My experience is that individuals and businesses have not been trying, and are not looking, to borrow right now,” she said.
Instead, Ms Grubisa has observed that people have been taking advantage of low-interest rates to pay down debts faster, with those who have been successfully doing this creating savings.
“Much like the government-backed unsecured and low-rate loans, and the instant asset write-off, I predict these reforms will see very little take-up,” she continued.
And despite the perceived ease with which banks predict to now be able to offer loans, the CEO predicts that the actual effect will also have little impact on decision making by banks: “Lenders will continue to be cautious, due to existing impaired loans. Banks are currently valuing properties low, checking serviceability and factoring in buffers such as job losses.”
“Lenders are expecting delinquent debt to hit the fan soon,” she highlighted.
She noted that over the last six months alone, banks have deferred around $500 million home loans, worth over $190 billion. That’s equal to one in 10 borrowers.
Even though banks have the discretion to continue deferrals for an additional four months, Ms Grubisa is not of the opinion that they will be willing to, meaning many mortgagors who are struggling with their repayments will be required to sell their property.
“We may have a tsunami of loans defaulting,” she forebode.
“With the existing regulations in place, households that want to borrow can still borrow. Under the reform, people who currently don’t qualify for loans – who have bad debt or a bad credit rating – will never qualify.”
nestegg has previously considered the winners and losers of the reform.
About the author

About the author


Loans
CBA launches digital home loan with 10-minute application
According to the bank, Unloan will provide a single low-cost interest rate to borrowers with an application time of as little as ten minutes. ...Read more

Loans
Are central banks weighing the economic pain of rate hikes?
The hype around interest rate hikes usually centres around the urgent and fundamental need to alleviate the consequences of inflation – but does this monetary policy do more harm than good? ...Read more

Loans
As rates begin to rise, how much more will new borrowers pay?
Mortgage holders could be asked to pay over $1,000 more per month due to rising interest rates. ...Read more

Loans
New investor home loan commitments climb to a record high
The value of new investor loan commitments reached $11.7 billion in March. ...Read more

Loans
Major banks announce interest rate changes
Following the RBA’s first rate hike in 11 years, the big four banks have tweaked their home loan variable interest rates. ...Read more

Loans
Up to $400bn of fixed rate home loans tipped to roll off into variable rates
A surge of refinancing is anticipated in the next couple of years. ...Read more

Loans
‘Liar loans’ most prevalent at ANZ, survey finds
UBS has identified an increase in factual misstatements coming from ANZ’s mortgage customers. ...Read more

Loans
How will rising rates impact mortgage stress?
Mortgage holders could face thousands of dollars in extra repayment costs per year as a result of impending rate hikes. ...Read more

Wrapping up an eventful 2021
Listen now

What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now

Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now

Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now

Loans
CBA launches digital home loan with 10-minute application
According to the bank, Unloan will provide a single low-cost interest rate to borrowers with an application time of as little as ten minutes. ...Read more

Loans
Are central banks weighing the economic pain of rate hikes?
The hype around interest rate hikes usually centres around the urgent and fundamental need to alleviate the consequences of inflation – but does this monetary policy do more harm than good? ...Read more

Loans
As rates begin to rise, how much more will new borrowers pay?
Mortgage holders could be asked to pay over $1,000 more per month due to rising interest rates. ...Read more

Loans
New investor home loan commitments climb to a record high
The value of new investor loan commitments reached $11.7 billion in March. ...Read more

Loans
Major banks announce interest rate changes
Following the RBA’s first rate hike in 11 years, the big four banks have tweaked their home loan variable interest rates. ...Read more

Loans
Up to $400bn of fixed rate home loans tipped to roll off into variable rates
A surge of refinancing is anticipated in the next couple of years. ...Read more

Loans
‘Liar loans’ most prevalent at ANZ, survey finds
UBS has identified an increase in factual misstatements coming from ANZ’s mortgage customers. ...Read more

Loans
How will rising rates impact mortgage stress?
Mortgage holders could face thousands of dollars in extra repayment costs per year as a result of impending rate hikes. ...Read more