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The days of homebuyers handing over details of their UberEats and coffee drinking habits to get loan approval from banks may soon be over.

The federal government plans to revise consumer credit protection laws introduced in the wake of the 2009 global financial crisis in order to streamline the lending process and reduce bureaucracy.

Homebuyers stand to benefit the most from the proposed reforms, which Federal Treasurer Josh Frydenberg will unveil on Friday.

Under current laws governing mortgages, personal loans, and credit cards, banks and lenders are responsible for verifying the information in a borrower’s application.

Financial institutions go so far as to examine the personal expenses and spending habits of borrowers.

Federal government hopes to open the door to home ownership for more Australians with overhaul of consumer credit protection laws (stock image)

The objective of the reforms is to speed up the loan application process and to shift the responsibility onto the borrowers.

“As Australia continues to recover from the COVID-19 pandemic, it is more important than ever that there are no unnecessary obstacles to the flow of credit to households and small businesses,” said Mr. Frydenberg.

“With billions of dollars given to borrowers each month, credit underpins Australia’s dream of homeownership while enabling businesses to invest, grow and create jobs.

“Maintaining the free flow of credit in the economy is essential to Australia’s economic recovery plan. “

Homebuyers stand to benefit the most from the proposed reforms to be announced by Federal Treasurer Josh Frydenberg on Friday.  Pictured are potential buyers attending an auction

Homebuyers stand to benefit the most from the proposed reforms to be announced by Federal Treasurer Josh Frydenberg on Friday. Pictured are potential buyers attending an auction

Reserve Bank Governor Phil Lowe recently hinted that consumer protection laws should be reviewed.

“From what started a decade ago as a principled framework to regulate consumer credit and provision has now grown into an overly descriptive, complex, costly and universal scheme… over time lenders have grown. have become increasingly risk averse and too conservative in their approach, ”Frydenberg wrote for the australian Friday.

“It’s now not uncommon for someone applying for a mortgage to be asked to explain individual discretionary spending and provide verification of a customer’s Netflix and Spotify subscriptions, usage of UberEats or MenuLog or other detailed information. All this to ensure that the lender is sure that he cannot be held responsible in the event that the borrower cannot repay the loan. ‘

Denita Wawn, Managing Director of Master Builders Australia, described the proposed reforms as a structural change.

“We believe the changes mean banks will use a market-based approach to risk,” she said.

“This should free up access to credit and we hope it will also streamline the process, which is currently very onerous for customers.”

It will take six months for the new laws to come into force if they are passed by the federal parliament.

Homebuyers (pictured at auction) would no longer have to justify Netflix and Spotify subscriptions, UberEats and MenuLog habits when applying for a home loan

Homebuyers (pictured at auction) would no longer have to justify Netflix and Spotify subscriptions, UberEats and MenuLog habits when applying for a home loan

Financial experts at comparison site finder.com.au have previously warned that spending, UberEats, and takeout could affect a person’s ability to get credit card or mortgage approval. .

“Your transaction history and spending habits will be taken into account,” Kate Browne, Finder’s personal finance expert, told Daily Mail Australia earlier this year.

“If you’re someone who spends non-essentials on a regular basis rather than saving, lenders may see you as riskier to lend.”

Insights director Graham Cooke added: “It’s not so much that Uber Eats is going to be a wake-up call, but if you combine a lot of outbound spending with things like gambling, all together, potentially. , make banks a little more cautious.

“If you’re in the habit of overspending, it could potentially affect your chances of getting a home loan.”

Australia's big dream of homeownership may soon be available to more potential buyers (stock image)

Australia’s big dream of homeownership may soon be available to more potential buyers (stock image)

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