Private Credit Gets the ASIC Treatment
ASIC Commissioner Simone Constant delivered a blunt message to the private credit industry this week: lift your game or expect the regulator to do it for you.
ASIC’s surveillance of 28 private credit funds found some ordinary practices.
Amongst other things these included inadequate default policies and a poor separation between lending decisions and independent assessments. The sector has until 2027 to lift standards. Enforcement investigations are already under way. Follow the link to see Commissioner Constant’s full speech to a gathering of commercial and asset finance brokers.
Refinancing Breeze Cools
If you believe the recent TV ads, refinancing your home loan is a breeze. Just don’t tell the folks you ask to organise your loan.
A survey of 588 mortgage professionals found 49.2% struggled to refinance clients’ loans because of increased serviceability requirements imposed by lenders. That’s almost double the 24.4% recorded six months ago. The 3% serviceability buffer sits squarely in the firing line.
Interestingly, the broker channel now accounts for 81.6% of new residential lending.
Can You See The Cracks?
There’s no mortgage crisis. But several numbers are starting to point in that direction. Low-deposit lending has reached $15.6 billion since the Home Guarantee scheme was uncapped, 90-day-plus arrears have risen to $25.9 billion and interest-only loans accounted for 24% of new mortgages in June.
Pricing For Trouble
The Big Four aren’t waiting for the RBA to make the first move.
CBA, Westpac, NAB and ANZ have all lifted fixed rates, while Macquarie has increased the rate twice this month.
Canstar says 18 lenders have increased fixed rates over the last three weeks, with expectations of rates staying higher for longer.
The numbers are interesting. A 0.25 percentage-point cash-rate rise would add about $91 a month to a $600,000 mortgage. If ANZ’s forecast of another rise in November eventuates, the cumulative increase across five 2026 hikes would be about $456 a month on that loan.
Meanwhile, the banks are also fighting harder for deposits. ANZ has lifted its top term-deposit rate to 5.30%, matching CBA, NAB and Westpac. The banks appear to have rediscovered the joys of paying customers for their money.
Bitcoin Wants a Mortgage
For something slightly different.
Now that ASIC has granted Fintech, Block Earner, a credit licence Bitcoin can be used as security for a property deposit loan. It will sit alongside a conventional home loan allowing borrowers to avoid expensive Lenders’ Mortgage Insurance.
The new product requires an initial 50% LVR, real-time monitoring and a 30-day fix-it period if the value of the security falls too far.
Block Earner, says its earlier pilot attracted more than $550 million in waitlist demand. Whether crypto becomes a serious part of Australian mortgage lending remains to be seen, but with Block Earner receiving a credit licence, it is getting harder to dismiss.
RAMS vs Franchisees
RAMS has agreed to a $29.6 million settlement with 15 former franchisees over terminated agreements and withheld trail commissions. RAMS has admitted no liability or wrongdoing.
This latest settlement comes after a separate $20 million Federal Court penalty over compliance failure in RAMS’ operations. In August, Westpac sold the RAMS mortgage portfolio to a consortium including Pepper Money.
ASIC’s Little Reminder
Fundo Loans has paid an $19,800 infringement notice over its website claim that it offered “no credit check loans” of up to $5,000.
ASIC says applicants were required to consent to credit checks and that checks were conducted on some applications. Payment of the infringement notice is not an admission of liability, but the message from ASIC is clear enough: if you’re selling credit, be rather careful about what you tell people they’re buying.
That’s how we saw the week on Money Road. Stay sceptical. Question everything. Ignore the Marketing Department.
