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New laws hurt self-employed borrowers
Released 2 March 2011

Self-employed borrowers are being forced out of the housing market due to the introduction of new consumer credit protection laws, according to mortgage broker Loan Market.   

Since the laws were introduced last July, low-doc loans – which are primarily designed for the self-employed and small business owners - have fallen from 10 per cent of the company’s total loan lodgements to just five per cent.

“Under the new National Consumer Credit Protection (NCCP) legislation, lenders are being more cautious when lending to the self-employed and small business owners who, unlike PAYG borrowers, do not have straight forward pay slips or group certificates to verify their annual income,” says Loan Market Chief Operating Officer Dean Rushton.

Mr Rushton says that although the NCCP laws were effective in countering irresponsible lending practices, people with genuine credentials were being rejected, especially since lenders had already tightened criteria following the GFC.