Comprehensive credit reporting could create home loans winners, losers
Treasurer Scott Morrison has mandated that banks move to the new system that could see some borrowers paying lower rates while others are punished.
In a speech to the Intersekt FinTech conference in Melbourne today, Morrison said the new comprehensive credit reporting regime will be mandated for the four major banks from the middle of next year.
While the major banks were heading toward the system already, Fairfax reported, Morrison argued that progress had been too slow and the lenders weren’t on track to hit government targets.
"This will be a game-changer for both consumers and lenders, and will lead to greater competition in lending and naturally provide better access to finance for Australian households and small businesses," Morrison told the conference.
The move could have far-reaching implications for home loan borrowers, with the new regime reporting not only defaults and judgements, but 24 months of account payment history. The changes could mean that even borrowers with a small amount of debt could see their score dragged down by late payments.
However, the system could also benefit newer borrowers, with a more comprehensive picture allowing first home buyers and younger applicants to establish a credit score quickly. The regime could also see banks price home loans relative to risk, with higher score borrowers being offered better rates, Morrison told the conference.
“If you have a good credit history – you're paying down your mortgage, you haven't missed a payment on your car loan and your credit cards are under control – you will be able to demand a better deal on your interest rates, or shop around, armed with your data,” he said.
- Mortgage rate hikes continue, with UBank and Virgin Money raising some rates by 20 basis points
- Ask Finder: Can I get a mortgage offset account in my business’s name?
- CoreLogic’s December figures confirm 2018 was a very rough year for the Australian property market
- APRA to remove interest-only home loan speed limits
- All of December 2018’s out-of-cycle rate changes