Could the ASIC HEM failure tighten mortgage lending?

There is one reason to think so today, via AFR:

Westpac Group is set to follow up its landmark victory against ASIC on responsible lending with sweeping changes to home lending policies that include more rigorous assessment, deep diving into household spending, and new debt-to-income analysis of higher-risk loans.

The bank is also planning to announce it is expanding expense categories from 13 to 18 and is upgrading its controversial Household Expenditure Measure (HEM) and treatment of other living expense changes.

From Friday through to early September the bank will start to roll out the consumer credit policy changes across its retail branch and broker networks, including revised expense categories.

The changes will also apply to Westpac’s BankSA, St George Bank and Bank of Melbourne.

Hmm, this may be misleading. While it appears to be a tightening, the certainty of the new regime may, in fact, be a loosening of credit if previously WBC bankers were constrained by fear and uncertainty owing to a lack of clarity in the system.

Time will tell.

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