Aussie founder John Symond has revealed his stance on a widespread investigation into interest-only loans and high LVR lending among Australian banks.
Speaking to Mortgage Business, Mr Symond said his personal belief is that borrowers, particularly first home buyers, need between a five and 10 per cent deposit as a “bare minimum”.
“I know that our brokers are out there and if someone is going to lend 95 per cent plus mortgage insurance they’ll do it, but this is my personal belief,” he said.
“I always say that unless you have a reasonable deposit - and I don't mean two or three per cent - then you are better off saving for a larger deposit and renting than going in to buy a property where you’ve got no real equity and no buffer if there is a dip in values.”
Mr Symond’s comments come after APRA and ASIC announced on Tuesday that they would be turning up the dial on their surveillance of mortgage lenders.
The probe will look at the conduct of banks, including the big four, and non-bank lenders and how they are complying with consumer protection laws, including their responsible lending obligations.
Asked whether he thinks the regulators should be investigating interest-only loans and keeping a closer eye on general lending standards, Mr Symond said he welcomed the investigation.
“I think it’s healthy,” he said. “I think they should be having a look at it.”
ASIC will conduct surveillance of the provision of interest-only loans as part of a broader review by regulators into home-lending standards.
Mr Symond said he has always held fairly strong views on what he sees as basic, important values, and has never been a supporter of owner-occupiers paying interest-only.
“I believe everyday mum and dads need to reduce debt, be it a mortgage, be it a credit card or a personal loan; they have got to get rid of it and reduce that debt.”
Financial stress is the greatest contributor to the breakup of marriages and partnerships, Mr Symond added.
“Especially young people starting a family - they don’t need that in their life,” he said.
“You’re better off not buying a home, you’re better off renting.”