From the AFR comes an ASIC response to the Variant Perception report, from Michael Saadat, the senior executive for deposit takers, credit and insurers:
Mr Saadat admits ASIC did not send out a team to the western suburbs of Sydney to talk to taxi drivers and “shadow shop” as Tepper and Hempton did in their report but he says he used ASICs powers of compulsion and went through the front door. It examined about 140 loan files from 11 lenders and conducted site visits to the major banks.
The report published last August expressed disappointment with banks slack lending standards. In many cases, the only explanation in the files for why an interest-only loan was being made was the vacuous phrase “to purchase a property.”
But the review found a few things that suggested most borrowers were reasonably able to repay their interest-only loans.
First in general the loans were mostly being made to better off clients. Also loan-to-valuation rates were higher for interest-only loans…Another comforting sign was that owner-occupiers borrowers often had interest-only loans in conjunction with off-set accounts…
Only one problem. The Jonathon Tepper and John Hempton tour of Western Sydney mortgage excesses took place in early February of this year. If ASIC has acted it is not obvious to the discerning eye on the ground.
