Strict Lending Rules to Ease
With the aim of encouraging new business and home loan lending the Federal Govt has decided to remove the responsible lending laws by the time JobKeeper payments currently end in March 2021. These rules made it harder to borrow, requiring detailed actual living expense records and associated supporting documentation to get a loan.
The scrapping of these restrictive rules will improve access to credit and to speed up the application process. But with the economic fallout from covid-19, the unemployment rate rising and low migration, the amount of people looking for a loan is greatly reduced.
While certain areas have very high tenant demand and low housing rental supply, other areas are facing the exact opposite scenario, so only time will tell if these changes to the lending rules will encourage people to take on more debt at this time.
Care needs to be taken for people considering taking a loan out at this time whether for their business or home or for an investment property loan, making sure they have emergency cash funds available and their job or business is secure in the face of the economic impact of Covid-19.