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Connective director Mark Haron has called for the regulatory focus to be shifted to other areas of lending to avoid a mortgage default crisis.
Mr Haron told The Adviser that the industry needs to push for more regulation on funding areas that have more of an effect on borrowers’ financial hardship, such as point-of-sale lending and car loans.
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“Interest-free loans to buy whitegoods, TVs and furniture cause people more financial hardship and concerns, and they don’t have any NCCP obligations, nor does a lot of the car finance,” he said.
“That needs to be addressed more so than the concerns around people being able to afford their home – it’s the other debts that they’ve taken out after taking out their home loan that are the issue.”
Mr Haron said the NCCP should apply to these areas of lending, otherwise there will be a lot more borrowers not being able to meet their mortgage repayments due to other debts they have taken out.
“You can take out a $10,000 loan at a department store to buy a whole bunch of stuff at a much higher interest rate, and then all of a sudden you’re a bit tight on making the repayments on your home loan – especially if the first two years of the loan were interest free,” he said.
“And when they lend you the money at the store, they’re not required to make any inquiries as to whether or not you can afford the loan or not.
“The industry needs to push this more, because the government really cares because those two industries – the point-of-sale merchants and the car yards – have huge lobby groups which will talk about how much it will affect the economy if all of a sudden they have to adhere to the NCCP.”
[Related: Smartline urges borrowers to consolidate now]
