Today an update has been provided by ASIC to its targeted review of interest-only home loans off the back of report 493.
The regulator confirmed that it has completed the first part of its review - a targeted review of the home loan lenders in the industry. ASIC's key findings so far were that:
- That a significant number of borrowers nearing retirement age are obtaining interest only loans; and
- That borrowers who use a mortgage broker were were more likely to obtain an Interest-only loan. QED does note however that at this point, no exact figures have been released and it is not known if ASIC have considered that brokers are more likely to help borrowers with ANY loan.
Whilst Interest-only loans are often appropriate for the borrower's circumstances, it is extemely important to make the right enquiries of the clients' financial position and exit strategy so you are able to DEMONSTRATE why the interest only feature is suitable.
Next, ASIC's review will be conducting an audit of lenders' and mortgage brokers' individual loan files, so it is particularly important to make sure that your overall compliance is well positioned if you regularly deal in IO loans.
QED has a number of useful services and tools to assist you in demonstrating that you are at the forefront of broker compliance, contact our office on 1300 817 662 for more information.