ASIC launches inquiry into dodgy mortgage lending

By Leith van Onselen

Last month, the Reserve Bank of Australia (RBA) released its bi-annual Financial Stability Review, which conceded that lending standards have been weaker than it had first envisaged, led by the prevalence of interest-only mortgages, along with poor documentation and verification:

While housing lending standards have been better in recent years than in the years leading up to the financial crisis, recent investigations by regulators have revealed that standards were somewhat weaker than had originally been thought. As a result, some borrowers have had less of a safety margin against unexpected falls in income, increases in expenses or increases in interest rates…