Following a recent high-profile report alleging poor bank underwriting and fraudulent behaviour by brokers, the Australian Prudential Regulation Authority yesterday flagged it would look into how easily loans can be approved “outside” banks’ policies.
APRA’s comments come after a report by US research house Variant Perception last month claimed Australia had “one of the biggest housing bubbles in history” and prices would fall 50 per cent in “many” parts of Sydney and Melbourne.
The thesis was partly based on “very poor” bank underwriting standards and that APRA was missing the risks. It added “disreputable brokers” could produce “authentic-looking tax returns” for clients and also encouraged lying about incomes to get “dodgy loans past bank loan officers”.
“The regulators trust the big four banks’ statistics, but we’ve seen that underwriting standards are much worse than advertised,” the report stated, adding mortgage brokers and banks had advised that getting a high loan-to-value ratio mortgage was “simple and requires only two pay slips”. Banks and mortgage brokers have rejected Variant Perception’s report and defended their processes.
Link: Originally reported by the Australian on March 18 2015
Date: March 18 at 4:42 PM
Reporter: Michael Bennet
Published by: The Australian
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Category: Australia Real Estate