Today, the Otago Daily Times reported:
Much of the banking industry tightened its lending criteria and changed risk weightings in 2008, which effectively made it more difficult to get a loan. However much of the lending system remains ungoverned... in fact the only real criteria to start up an unregistered bank is to not have the word 'bank' in the title.
The government does plan to introduce tougher consumer credit laws, which will mainly target loan sharks. But there are currently no rules to ensure responsible lending requirements. A lender isn't even required to expect the borrower to be able to repay the loan without substantial hardship.
It's just another factor causing our home ownership levels to fall.
Mortgagee sales figures may have dropped since the harshest days of the recession, but 89 Otago properties still had to be sold in the 12 months to September 2011.
[...]
Massey University Centre for Banking Studies director associate professor Dr David Tripe said the peaks in 2009 and 2010 were no surprise.
"In general terms, when economic circumstances are more difficult, there will be more instances of mortgagee sales," he said.
Reasons for people going through mortgagee sales varied greatly: sometimes it was the fault of the lender, other times the property owner, and sometimes it was due to circumstances outside either party's control.
"Generally, each situation is slightly different, but the most common reason for problems is people thinking they can afford bigger mortgages and taking out bigger loans then they can actually afford. Sometimes they are encouraged in that process by lenders."
Much of the banking industry tightened its lending criteria and changed risk weightings in 2008, which effectively made it more difficult to get a loan. However much of the lending system remains ungoverned... in fact the only real criteria to start up an unregistered bank is to not have the word 'bank' in the title.
The government does plan to introduce tougher consumer credit laws, which will mainly target loan sharks. But there are currently no rules to ensure responsible lending requirements. A lender isn't even required to expect the borrower to be able to repay the loan without substantial hardship.
It's just another factor causing our home ownership levels to fall.
