QLD couple plans to sue the bank for irresponsible loans of $ 1.6 million

This is what is called the Household Expenditure Measure (HEM), a bare minimum estimate for the essential costs of living, as well as limited discretionary spending – and the borrowers ultimately realize that their banks have miscalculated their numbers. across the country have been left with investment properties that they can not afford or are forced to sell their family homes and enter the rental market as they struggle to stay afloat and failure to repay their mortgages

the use of the tool, with the person who invented it saying that it was "alarming" that they did not l & # 39; 39, did not use as expected.

The HEM was not designed to be used alone as it only estimates spending. The idea was that the banks would still be conducting other investigations.

But many families claim that their banks have never done it, ignoring dependent children and other basic living expenses such as insurance and

Lindsay David, founder of LF Economics, said he was struggling to find borrowers whose annual expenses were as low as was indicated in the Westpac sample data.

"If you live in a certain neighborhood, the The minimum cost of living there for you and your wife could be $ 32,000 a year."

"That's what it's all about." they would use as a minimum benchmark against your income to see what's in between $ 80,000, the cost-of-living benchmark is $ 30,000, and there is $ 50 000. The banks' algorithms are designed to say that you have the ability to repay $ 49,999 a year to the bank, whereas in reality, your cost of living is significantly higher. "

The HEM is based on data from the Australian Bureau of Statistics. The Survey of Household Spending from SBS for 2015-2016 estimated at $ 846 a week the average household spending for "necessary expenses" such as housing, groceries, fuel , health care and transportation

. UBS reported that in 2017, 70 to 80 percent of all home loans in Australia used the HEM benchmark.

Earlier this year, Westpac was forced to rebadure investors about the quality of real estate. his mortgage book after a review commissioned by the 2017 APRA was published by the Royal Commission on Banks.

This review, conducted by PwC, described banks' confidence in HEM as "surprising" and recommended its use as

The Queensland couple Ian and Michelle Tate are clueless in the thought that they risk losing everything because they claim that Westpac grossly underestimated their spending

. decided to invest in three more in 2013 and 2014 while Ms. Tate was a full-time mother, all funded by Westpac loans that they blocked as interest only and secured against their first property.

Ignore the end of the interest period They had debts of $ 1.6 million that they fear of not having the means to pay.

The couple, who has three children, was forced to borrow from relatives to sell his house and build a new property, but Westpac will not release the funds because the house was securing the property. investment that they can not cover anyway.

"We lose everything," Tate said fondly to the ABC 7.30 p

Jonathan Mott, UBS badyst, said that data from the The bank's sample used "raised questions" about the quality of Westpac's $ 400 billion mortgage portfolio. "Westpac has undertaken significant work to improve its mortgage underwriting standards over the past 12 months, but we expect it and other majors to fine-tune the underwriting standards given the concerns." of the Royal Commission on Responsible Lending ".

Gary Tahmizian, a resident of Western Australia, said his situation had caused the worst stress he had ever experienced after claiming NAB had approved an investment loan.

million. Tahmizian said that his basic living expenses were underestimated and that his three children living at home were not listed as dependents when the bank approved a loan for a unit in Newman in 2014.

"Looking at the application, I thought how can they approve that? How can you live with $ 2,000 a month?", He told ABC

"They have put $ 80,000 of furniture to increase my badets and I do not have $ 80,000 of furniture.a few months, going through the mortgage stress, it is something that i have never previously known, I do not wish it to anyone else. "

M. Tahmizian brought his case before the Ombudsman who later stated that NAB was not responsible for his investment decisions.

In a statement to the ABC, NAB stated that Mr. Tahmizian had been

The inventor of the tool, Guyonne Kalb of the University of Melbourne, said that she was worried about how she had been used since 2008.

"Every household is different to have special expenses" She said, "If you give loans, you should do the necessary checks. I find that this concerns the fact that people would get loans that they could not repay. "

Westpac said that he had put in place robust processes to ensure that He lent responsibly.