Here’s the good news: for the past 30 years we’ve all enjoyed watching the value of our homes skyrocket. Now the bad: the housing boom is about to end, and for many Australians – both homeowners and investors – it’s going to end in tears. While you think you’ve heard this all before, remember we now have the highest household debt in the world. Worse still, we have become so blasé about the way we borrow money, we’ve forgotten the consequences – most importantly, that we need to pay it back. So if you have a home loan and you want to stand any chance of surviving a wipeout, you need to be very, very careful.
Reporter: Ross Coulthart
Producer: Grace Tobin
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The Commonwealth Bank's Response to 60 Minutes:
Thursday, 18 February 2016:
At the Commonwealth Bank, we are committed to securing the financial wellbeing of the communities where we operate and one key aspect of this is to ensure we act as a responsible lender. There is no incentive for any bank to lend money to a customer who we do not believe can make repayments. We recognise that among the millions of customers who take loans with us there can be instances where they fall into difficult financial circumstances that neither we nor them could be expected to foresee. When this happens, it is very upsetting and stressful which is why we always encourage customers to speak with us early and to access our comprehensive arrangements for hardship.
In both cases referenced, we have kept the lines of communication open and in the case of the Moloneys we have been in discussions since late 2014. Both the Moloneys and the James’ have had the opportunity to take their concerns for independent review by the Financial Ombudsman Service whose findings have confirmed our lending practices were appropriate.
This week we have been in touch with both the Moloneys and the James’ to organise a meeting with a specialist from our Customer Assist team. We are committed to better understanding their full circumstances, particularly where we may not be their main banking partner. As part of our discussions we are seeking to explore all options including how we can help them stay in the home in which they live as we work through their particular circumstances.
As Australia transitions from the mining boom, we know there are towns that are experiencing worsening economic conditions however, the vast majority of our customers continue to meet their home loan repayments.
The National Australia Bank's Response to 60 Minutes:
The statement below is attributable to the General Manager for NAB Assist, Joseph Seychell:
“NAB is absolutely committed to lending responsibly and sustainably to our customers. Due to privacy reasons, we cannot comment on individual customers.
Lending applications are considered on a case by case basis, taking account of individual circumstances. We continually review our risk settings, considering a range of economic factors to get the balance right and manage the risk for our customers and our business.
Valuations in mining and related towns have fallen significantly in recent years from the peaks of 2011-13 as the economy has transitioned, leading to reduced demand for housing and lower rents in these areas. This has in turn impacted residents, investors and communities.
Our NAB Assist teams of specialist bankers have been travelling to many of these areas, talking to local residents, businesses and our customers to gain a first-hand appreciation of the situation.
We are committed to supporting our customers, with our NAB Assist team specially trained to understand their situation and assist based on how we can get the best outcome for them.”
For more information on Jonathan Tepper visit Variant Perception.
To purchase Kate Moloney's book, Bright Yellow Happiness go to her website.