Interview on 6PR Breakfast on HELP debts and lending

Karl Langdon (Host): Anna Bligh is the Chief Executive Officer of the Australian Banking Association. Australians with Student Help debts to the tune of $43 billion, $3 million Aussies have outstanding help loans, Milsy.

Steve Mills (Host): So, when you apply for a loan, you have to put it down as a liability, and the banks you got that debt, so that’s going to restrict the amount that we can lend you. Some would say this decision to maybe not take that into account as much. Is that responsible lending, or is it a good move? Anna Bligh is the chief executive Officer for the Australian Banking Association. Good morning, Anna.

 Anna Bligh (Guest): Good morning, how are you?

Steve Mills: Not bad, why have you gone down this path?

Anna Bligh: Well, this is a decision by the regulators, APRA and ASIC, who determine what the lending rules for banks should be, and what they’re doing is giving a bit more flexibility within the existing rules. So, it’s not a carte blanche, go for your life. It’s giving banks the flexibility to look at the individual circumstances. For example, if someone’s within the last 12 months of paying off that loan, that might be something that they could overlook if you like, because they can see the end of that debt coming. And I do think it will make a difference for some potential borrowers to either get a loan they wouldn’t have otherwise, or to maybe borrow a little bit more than would have been possible. So, we certainly want to stay within the responsible lending framework, we don’t want to put young people into debts they can’t afford. But a little bit of flexibility to look at the individual circumstances will make a difference for some borrowers,

Steve Mills: Do many get knocked back because of help loans?

Anna Bligh: Well, I don’t have the numbers on that, but it would certainly be the case that for some borrowers, that debt would stand in the way of them – the assessment that banks have to carry out is, can you afford to repay this? And they look at how much money is coming in and what how much money is going out every week. And if you have a high HECS debt and you’re paying a big amount every week, they have to take that into account, because it’s real. But if there are – there might be other mitigating circumstances where they can look through that, if you like. So, it will mean that for some people, this flexibility could give them the chance to get into the housing market earlier than would have otherwise been the case, and that’s a good thing.

Steve Mills: What did you think of the Commonwealth banks profit figure this morning?

Anna Bligh: Well, I think everybody raises their eyebrows every time they see big corporate profits, but I think most Australians should be should actually be pleased, because every superannuation fund in this country holds Commonwealth Bank shares, and those profits get distributed out to those shareholders in the super fund. So, your super fund will be doing very well out of those profits today.

Steve Mills: Unlessyou’ve got a mortgage with a Commonwealth Bank or a line which you are paying over the odds, obviously, if they’re making that kind of profit.

Anna Bligh: I think if you go and have a look at the profit, it comes from a range of different sources.

Steve Mills: The underpayment of interest for people that have deposits?

Anna Bligh: The banks in Australia are actually some of the most competitive in the world. There is a lot of competition in the market at the moment because people are trying to get into the housing market. People should shop around to get the best possible price, but we are seeing more Australians jumping in and trying to get a foothold in the housing market.

Steve Mills: All right Anna, good to talk. Have a good day.

Ends

Anna Bligh