ASIC releases guideline updates to help ‘mortgage prisoners' refinance

Ceyda Erem

12 Dec 2019

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A year on from Mozo’s analysis of the rising number of ‘mortgage prisoners’, the Australian Securities and Investments Commission (ASIC) has made guideline updates to the National Consumer Credit Protection Act 2019 about responsible lending to mortgage prisoners. 

Coined last year, the term ‘mortgage prisoners’ refers to homeowners who are unable to refinance their home loans because they would now fail to meet lending requirements required by banks. 

According to Mozo’s home loan expert, Steve Jovcevski, these are the homeowners that require the most financial assistance. 

RELATED: The number of Aussie ‘mortgage prisoners’ is set to rise, according to Mozo research

“The sad reality is borrowers who need competitive mortgage rates to stay financially afloat are most likely to be mortgage prisoners. When a customer is essentially tied to a provider, they are at the mercy of whatever rate rise or conditions the bank chooses to impose,” he said.

However, the new guideline update from ASIC will now provide transparency and assistance to lenders and brokers to their obligations when assessing customers looking to refinance their home loans. 

For instance, a borrower would be a suitable candidate for refinancing their loan if they’ve regularly made payments on time with their existing loan. 

A borrower would also be eligible should the new rate result in lower repayments as well as meet their product requirements. 

Although regular and on time repayments may be music to the ears of many lenders, ASIC has acknowledged that it could also “disguise circumstances of financial stress”. 

“Consumers will generally prioritise repayments for a principal asset such as a home over other outgoings and may take on additional credit to meet repayments (e.g. by using a credit card),” the Regulatory Guide states. 

RELATED: Australia’s best refinance home loans for 2019

To combat this, the regulatory body has recommended that lenders and brokers obtain a repayment history of at least 12 months and that they make themselves aware of any:

  • Signs of financial stress, such as credit card delinquencies or missing utility repayments 

  • Signs of financial stability, such as paying their credit balance in full 

Refinancing your home loan could make a massive difference to your monthly repayments and more importantly save you thousands over the life of your loan, so if you’re interested to find out if you could be getting a better deal on your home loan, check out our home loan comparison tool

Home loans for refinancers

Rates updated daily. Advertiser disclosure.

  • loans.com.au

    1.99% p.a.variable for 12 months and then 2.48% p.a.

    2.47% p.a.

    $1234

    Product details Close details
    Smart Booster Home Loan

    1 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR

    1.99% p.a.variable for 12 months and then 2.48% p.a.

    2.47% p.a.

    A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends). 20% minimum deposit required.

    Smart Booster Home Loan

    A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends). 20% minimum deposit required.

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • Optional - with 0.10% additional interest

    • $520

    • 1.99% p.a.variable for 12 months and then 2.48% p.a.

    • 2.47% p.a.

    • $520

    • 80.00%

    • $50,000

    • $1,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Smart Booster Home Loan

    Details Close

  • UBank
    Mozo Expert Choice Badge

    p.a.

    2.22% p.a.

    $1234

    Product details Close details
    UHomeLoan

    Owner Occupier, Principal & Interest

    p.a.

    2.22% p.a.

    $0 fees and easy application with the Mozo Experts Choice Home Lender Bank of the Year.^ Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.

    UHomeLoan

    $0 fees and easy application with the Mozo Experts Choice Home Lender Bank of the Year.^ Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.

    • $0.00

    • $0.00

    • yes - free up to $20,000 p.a.

    • no

    • no

    • $395

    • p.a.

    • 2.22% p.a.

    • $395

    • 80.00%

    • $100,000

    • $2,000,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • $395 Establishment fee waived for fixed rate loans that settle by 31 March 2020. Receive 1.75% Receive 1.75% 3 year fixed rate when you apply by 26 February 2021 and settle within 90 days.

    Read our Mozo Review to learn more about the UHomeLoan

    Details Close

  • Athena
    Mozo Expert Choice Badge

    2.19% p.a.

    2.19% p.a.

    $1234

    Product details Close details
    Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    2.19% p.a.

    2.19% p.a.

    Fast online application with no fees. Free extra repayments and redraw facility. Min 40% deposit. Crowned Best New Home Loan for 2020 by the Mozo Experts.^

    Celebrate Variable Home Loan

    Fast online application with no fees. Free extra repayments and redraw facility. Min 40% deposit. Crowned Best New Home Loan for 2020 by the Mozo Experts.^

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • $0

    • 2.19% p.a.

    • 2.19% p.a.

    • $0

    • 60.00%

    • $100,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Celebrate Variable Home Loan

    Details Close

  • Macquarie

    p.a.

    2.53% p.a.

    $1234

    Product details Close details
    Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR 70-80%

    p.a.

    2.53% p.a.

    Flexible loan structure – create up to six loan accounts with different rate and repayment types. Free redraw from your loan using Macquarie Online.

    Basic Home Loan

    Flexible loan structure – create up to six loan accounts with different rate and repayment types. Free redraw from your loan using Macquarie Online.

    • $0.00

    • $400.00

    • yes - free

    • yes - free

    • no

    • $0

    • p.a.

    • 2.53% p.a.

    • $0

    • 80.00%

    • $150,000

    • $750,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Monthly

    Read our Mozo Review to learn more about the Basic Home Loan

    Details Close

^See information about the Mozo Experts Choice Home loans Awards