Bad to the Bone Australian Banks conned two million families re Cost of Living fake figures
FROM 2012
In our view, living at the poverty index would be unsuitable for mortgage borrowers, and the banks’ default living costs are even below the poverty index and well below any other comparable budget. We believe the banks’ default living assumptions underestimate the real cost of living for mortgage borrowers. While it might be plausible for a borrower to keep within such a low budget for the short-term, we question if it is sustainable.
If Merrill Lynch has reverse engineered from online calculators then, we need to factor in that the calculators themselves are marketing tools and probably inflate potential customers credit potential.
Nonetheless, the breadth of the discrepancy between what might be considered prudent lending criteria and what has been reverse engineered suggests there is fire behind this smoke.
Merrill Lynch analyst Matthew Davison said "banks are being too aggressive in growing their market share, while overestimating borrowers' ability to service a loan. We think banks lend too aggressively against living costs," .
Davison said rising costs for household necessities such as food, transport and healthcare have not been taken into account by banks in the loan approval process.
"We believe the strain on the household budget is too big to ignore, and banks don't accurately measure household costs," Davison commented.
FROM 2004
Few borrowers would be able to pay back much of a loan with an income at the poverty line, but many banks are content to provide loans on the basis that their customers would be able to repay their loan while living at a standard equivalent to a poverty line income. Westpac said they adopted the Henderson poverty line measure into their assessment of credit cards, personal loans and mortgages in July. Bendigo Bank said it uses a loan servicing model that takes into account net disposable income, the number of children, living expenses, the consumer price index and the Henderson poverty indices. St George said it used at an expense-to-income ratio, a buffer for potential interest rates of just under two per cent, and the Henderson poverty line to assess loan serviceability. The Australian Prudential Regulation Authority said the use of poverty line measures in loan approval did not leave much for a family to live on, and was also untested for lenders across the economic cycle.
Aussie borrowers conned into 30 years of poverty and financial stress
From the BFCSA archives April 2012
Who was the moron in each Bank who thought this was realistic?
Who dreamed up this scenario?
Oh, of course, it's the borrower's fault and they should mind read what's really going on when Banks pull stunts like this?
Try living at that level for years, compliantly paying exorbitant interest rates - let alone the 30 years Banks expect.
Banking Code? What Banking Code?
Affordability test? The lenders weren't interested in income ...
That's the borrower's liability, according to the lenders.
I bet the Banks thought the starvation game was a fun trick to do to borrowers.
It's beyond a joke.
Many of these borrowers go without, experience great personal stress and suffering, bring up kids and send them to school, juggle all the rest of their bills - often wondering why they can't make ends meet and thinking it's their fault somehow.
Little wonder that having a bank loan shortens their lives!
An Australian Home Loan = Chronic Financial Stress for the average Aussie battler.
And when the long suffering borrower finally asked the Bank for help they were either "helped" with further debt called buffer loans and credit cards or abused because they couldn't meet their repayments; it depended on how much equity was left in their home, because that's all banks were - and still are - interested in. Their interest in income or "affordability" is based on the minimum level of consumer credit code compliance they can get away with - not much has changed there.
If the borrower had an LVR of 80% or more there was little headroom in equity ... forget about buffer loans and equity with a 97% LVR!
So that poverty line assessment as "affordability" is designed to make the borrower fail, to set them up for more credit products ie. debt based on the assumption of rising value in their property. Too bad if the market drops ... and the most vulnerable borrowers were the ones targeted for this treatment ... once again the borrower's fault?
Finally the whole credit castle comes crashing down into default and the borrower loses the lot.
Where are all these Lo Doc loans, scoff the Australian banking regulators. We know. They're still buried like time bombs under all kinds of bank credit finagling. Scam loans & coverups.
Don't touch an Australian Bank loan or credit card or any form of credit facility until you check in with BFCSA first.
APRA: get off your backsides NOW and look at this information in the cold light of day.
How can you say this industry is well-regulated?
Where have you been, allowing this to go on?
Stop assuming every Australian borrower has an MBA or even financial literacy! They don't.
Nor do those who run Treasury, by the size of the debt!
These same below the poverty line borrowers are also expected to pay tax on their incomes.
Politicians: how DARE you tell the world how well Australian home owners are doing. It's a con job.
You want to support the IMF and other overseas fat cats? Fine, do it out of your own salaries.
Don't expect hardworking Australians, especially those so unfortunate to have Australian Bank or non-Bank loans based on these inhumane living standards, to pay for your indulgences and career moves.
Our politicians owe Australian borrowers big time for this shocking mess of banking loan fraud and credit misconduct, predatory lending, poverty, bankruptcy and homelessness...
They want our vote?
ROYAL COMMISSION INTO BANKING - WIDE TERMS OF REFERENCE