Bank employees and mortgage brokers are still expected to meet lending targets as high as $3million every month – despite Australians carrying the second highest level of household debt in the world, it has been revealed.
Australia has a debt to income ratio of 190 per cent meaning households have almost $2 of debt for every $1 they earn, the ABC’s Four Corners program reports.
But despite efforts to counter the issues – exacerbated by a decade of rising property prices, low interest rates and fairly easy credit, banks are still setting high performance targets.
Bank employees and mortgage brokers are expected to meet lending targets as high as $3million every month. File photo
Shockingly, staff are even being warned they could lose their jobs if they do not hit the targets by signing up more mortgages.
ANZ’s chief executive Shayne Elliott said changes had been made after a review found problems in the lending culture earlier this year.
He said that 70 per cent of ANZ’s targets are now geared towards customer satisfaction and ‘not all about the sales.’
However, Philip Demsey, an ex-mortgage broker, told the program that he left the industry because of the commission-only pay.
ANZ’s chief executive Shayne Elliott said changes had been made after a review found problems in the lending culture earlier this year
He said most brokers have no base salary and are expected to meet targets that can be as high as $3million a month.
‘There have been people in the industry who have been lending clients too much money, encouraging them to borrow more than what they can comfortably afford,’ Mr Demsey added.
It’s led to a ‘massive affordability problem,’ according to Gerard Minack, the former head of development strategy at Morgan Stanley.
He said the willingness of brokers to lend will exacerbate the downturn.
‘For every $1 of household income, there’s [nearly] $2 of debt,’ he said.
‘I can’t think of a single economy that’s had a downturn with that much debt where it’s not been a deep downturn.’