Home-buyers applying for a mortgage could soon be asked to explain their Netflix subscriptions and private school fees, under new changes to lending regulations.
Under the Australian Securities and Investments Commission’s new Responsible Lending Conduct guidelines, lenders are encouraged to ask for “additional information” to determine whether consumers can afford loans.
“The affordability of the credit product is likely to be an important requirement for most consumers, and many consumers will need to reduce their current expenditure to afford the repayments and other financial obligations they will be committing to,” the report states.
“If the consumer will need to make spending reductions and lifestyle changes to meet the financial obligations of the credit product, you may need additional information to enable you to determine whether the credit product will meet the consumer’s requirements or objectives.”
One of the “lifestyle changes” proposed by the report is reducing a consumer’s school fees by moving their child to a public school.
Another lifestyle change proposed by the report is cancelling monthly streaming services, like Netflix, Spotify and Stan.
Once the borrower agrees to cancel their streaming service, the lender can request an email from the subscription service confirming the borrower has cancelled their account.
ASIC Commissioner Sean Hughes said: “We have listened carefully to all stakeholders and addressed areas where we consider updated guidance would help. We hope that today’s guidance will assist industry to more confidently make responsible lending decisions and to facilitate good lending outcomes for consumers.”
What else can lenders look at?
If you’re transferring a mate after they picked up the total bill for last night’s dinner, and added a silly or suggestive transfer description, lenders can question it.
“We literally go through your statements line by line,” Pink Finance’s director, Nicole Cannon, confirmed to Yahoo Finance.
“And we have to categorise it, and if the description has something suggestive in there, the banks may question it.”
Lending institutions are also keeping an eye on your Uber Eats habit - and your bucks or hens night.
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