Lender policy hurts women’s ability to borrow
Its International Women’s Day today and oh my I am not happy about this at all.
Maternity leave is not income when it comes to assessment of a loan.
In our Mortgage Broking business I am actually often low level annoyed at the silly things that landers do that seriously hurt women’s ability to borrow – but this one has me outraged!!!
Hiding behind sensible lending policy is just not acceptable here. A lender needs to assess a clients ability to repay a loan when making a credit decision to lend money. The way this works for self employed is usually the average of two years income.
I have a client who is married and looking to borrow with her husband for her first home. She has been self employed for many years with a steady income.
In 2020 my client earned $50,000
In 2019 my client earned $33,000 plus government maternity leave of $16,000
So what happens when a loan applicant has taken maternity leave and received a government payment in one of those years?
The lender will not include the government paid maternity leave as income. This means the average over two years drops and the client appears unable to support the loan.
We pointed out to the lender that in the absence of maternity leave our client would have been earning her income as normal – so please use it, they said no.
So we asked if the 2020 year could be taken in isolation given this was her real income. They said no.
Does the lender feel she will drop the ball in her business because she has a baby?
In a completely different scenario I had asked the same lender to use the most recent year of a growing engineering business as income and the answer for that applicant was yes.
We also need to examine impacts of lender policy on women.
In my role as a mortgage broker I am constantly faced with policy that discriminates:
Not using government maternity leave payments as income.
Subtracting JobKeeper from year to date income earned – even though the potential borrower remains employed.
Reducing allowable income to 80% for casuals (60% female) and shift workers (think retail, nursing, cleaners, community services), though not for emergency services (ambulance, police, fire).
Even harder if you are a single woman:
Not allowing parenting payment or family allowances to be included as income.
Not allowing regular child support payments to be included as income (87.1% of recipients are female).
(Statistics from ABS and CSA)
And again maternity leave is not income when it comes to assessment of a loan.
Is it time to lift the lid on these lending practices and call them out or what they are so that we as women can get equal access to lending?