Via Domainfax:
Banks would have to bluntly warn parents planning to guarantee their children’s business debts that they risk losing their home, and that many small businesses end up failing, under proposals to the royal commission.
…However, the major banks are resisting further change, arguing current laws and the industry’s revamped code of conduct give guarantors enough protection, with one suggesting further change could make it harder to get a loan.
…Currently, banks must encourage guarantors to seek legal advice, and guarantors are protected by parts of the law including a ban on unconscionable conduct. In his closing remarks earlier this month, senior counsel assisting Michael Hodge questioned whether these were adequate.
Well, der. Include the warning. Especially since the kids are about to ask for much larger loans. Via the AFR:
A typical deposit on a $1 million residential property has nearly tripled from about $50,000 to $150,000 as borrowers commit to tougher standards demanded by regulators, increasing pressure on the Bank of Mum and Dad or unsecured loans to make up shortfalls, lending analysis shows.
Deposits required for nearly eight-out-of-10 loans have increased from a minimum of about 5 per cent of the property price to about 15 per cent of the price for investors and 12 per cent for owner-occupiers, it shows.
…Sally Tindell from RateCity said: “Home buyers no longer need one or two incomes to get their first property. They now need three, including their mum and dad.
MOAR needed.
