ASIC has released Information Sheet 185: Using ASIC’s reverse mortgage calculator (INFO 185) to assist industry use of ASIC’s MoneySmart reverse mortgage calculator.
Under the National Credit Act, credit licensees are required to use the calculator to make and show prospective reverse mortgage borrowers how much their debt will increase over time and what this may mean for the equity in their home and how changes in interest rates and house prices could affect the equity in their home.
Credit licensees must also provide consumers with a printed copy of the projections.
ASIC has also updated Regulatory Guide 209: Responsible lending conduct (RG 209) to take into account new responsible lending obligations that apply to reverse mortgages, including:
- the requirement for licensees to make reasonable inquiries about a consumer’s requirements and objectives in meeting possible future needs
- presumptions of unsuitability where the loan-to-value ratio exceeds set thresholds based on age, and
- how the requirement to make and show equity projections can be used to meet existing responsible lending obligations to consider requirements and objectives.
