No deposit home loans appear unlikely


UPDATE September 18, 3:45pm:
“The My New Home scheme is an interesting proposal – my only concern is that there’s often a difference between what governments, lending institutions and finance brokers say people can borrow and how much they should,” says Duncan Poulson, NT Regional Commissioner of the Australian Securities and Investments Commission (ASIC).
ASIC is responsible for administering the National Consumer Credit Protection Act 2009, including the responsible lending provisions of that Act.
Mr Poulson says: “The key concept of responsible lending is that Australian credit licensees and their representatives should not enter into a credit contract with a consumer, suggest a credit contract to a consumer or assist a consumer to apply for a credit contract if is unsuitable for the consumer. A contract will be unsuitable if people are unable to make repayments without substantial hardship.”
Mr Poulson says in September 2011, ASIC launched ‘Mortgage Health Month’ in response to rising rates of mortgage default in Australia.
“The main ‘call to action’ of this campaign was to encourage people to do a mortgage health check. In November 2011, ASIC published a report on our review of responsible lending conduct.”

Posted September 17
The new government appears unlikely to implement the no-deposit, low interest scheme, My New Home, promised by the defeated Labor government – certainly not in a hurry.
“The dreams of hundreds of Territorians are on hold as Chief Minister Terry Mills continues to delay making a decision on this important home ownership program,” claims Opposition Leader Delia Lawrie.
But a spokesman for Treasurer Robyn Lambley says the new government’s Management Review Board, tasked to take the NT back into a balanced budget, will be looking at the scheme but has not set a deadline for this review.
Alice-based CDU Professor Rolf Gerritsen says some of the new schemes were “silly economics,” for example, “the one that allowed you to borrow [for housing]  $400K, with the government putting in $200K interest free.
“You could pay off your $200K and then pay off the government upon which you paid no interest.
“I don’t think that these schemes would have continued if Labor got re-elected.
“Without restrictions on previous / current home owners the budget would have blown out.”
Prof Gerritsen says: “The scheme that waived the deposit and charges was definitely a sub-prime initiative.”
Sub-prime loans in the USA triggered the still ongoing Global Financial Crisis.
Ms Lambley’s spokesman says the NT Treasury and the Reserve Bank had expressed concerns about no deposit home loans.
The Territory Insurance Office (TIO) has announced it is not accepting any new applications “at this time” but allows “existing applicants for the My New Home Loan package to proceed with their loans”.
Eligible were people over the age of 18; they had to be a resident of the Northern Territory; there was no income or asset test, and they could own other property.


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