Family benefit assessments ‘unjust’: Brokers urge reforms

Ms King said, for example, one client who was a single mother with four children, got their loan application knocked back, despite having a court-ordered agreement with her partner for 50:50 custody and demonstrating secure finances.

“I wanted to use actual living expenses as the best guide, and use the court agreement as evidence to support that. And I found the lenders that would look at her were extremely minimal,” Ms King said.

“I sent it out to almost 20 lenders, and I found that not even a handful of them would actually look at the client. And I thought that is just crazy.

“Why are we assessing a single person with four dependents as a single person with four dependents when they’re actually only responsible for them 50 per cent of the time and there’s a court ordered binding agreement that their income and their child maintenance and everything is subject to that agreement, except for lender policy.”

While binding family agreements are court ruled, Ms King said lenders often use a “more conservative approach” to calculating affordability for applicants with dependents.

“I initially did think that it was a little bit unjust, and sexual bias, but I can see that this whole policy actually affects families, not just women, men as well,” Ms King said.

“But I do think that sometimes there seems to be more women affected by this.”

Pushing for change

The group aims to tackle five policies to improve lending conditions for families, these include binding family agreements, maternity/paternity payments, family assistance, child support and carers payments.

Ms King said they are currently gathering data of lender policies. 

“We found a lot of the time some of the lenders would look at these [policies] as an exceptions basis, which means that there’s that ambiguity around lodging applications,” Ms King said.

While most lenders do consider child maintenance as income, it is usually for children under the age of 13, despite many payments continuing until a child is 16, or 19 in some cases.

In addition, maternity and paternity payments are also assessed differently among lenders, setting some families back from getting home loans.

Ms King said there needs to be more consistency and merit around how families are assessed.

“If you’re going for a home loan application, no matter what your life cycle is and where you’re up to, if the income is almost guaranteed it should be able to be used for supporting a loan. Particularly if you’ve met all the current criteria to meet that income,” Ms King said.

Rental crisis, cash rate rise concerns

With a rental crisis across Australia, fuelled by the pandemic, as well as the mounting threat over a cash rate rise, Ms King said it’s become more important to get more families into secure housing.

Ms King said more inclusive policies could make a “massive change” to every family out there, as lending tightens.

“Some of the stuff that’s court ordered and government stamped, we should be able to rely on these, we rely on the commitment but not the income for some reason.”

“This might be the difference between getting them into their home or not.”

While it’s early days yet, Ms King said initial conversations across the industry have been supportive and hopes to bolster support from multiple lenders to ensure more families gain secure housing.