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Jessica Darnbrough
The National Consumer Credit Protection Act has been misinterpreted by the industry, Gadens Lawyers partner Jon Denovan has claimed.
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Last week, brokers voiced their concern about a certain section of the legislation which asks a borrower to prove they have the capacity to repay a loan in full at retirement without selling their owner occupied property.
The Adviser was flooded by comments from brokers suggesting the new laws were discriminatory.
But, Gadens Lawyers’ Jon Denovan said the laws had been poorly conveyed to the industry.
“The legislation doesn’t mean what some people think it means – namely anyone over the age of 35 can’t borrow money for a home. Just think how many people that would disqualify,” he said.
“The legislation has been misinterpreted. When it says you have to repay the loan before you stop working, no one has any idea as to when a particular borrower will retire. Who is to say that they have to stop working when they are 55, 65 or even 75?
“Brokers that have found it hard to get their older clients’ loans approved, have had trouble because of recent changes in lender policy. Lenders are allowed to change their policy as they see fit. This is not in response to the new legislation.”
But RE/MAX Western Australian managing director Geoff Baldwin is not so sure.
Speaking to Market Focus yesterday, Mr Baldwin labelled the legislation a “joke”.
“The thinking behind this legislation is ridiculous. They are going to nanny people to the point where they can’t get a loan because they are all of a sudden too old,” he said.
