Banks likely to tighten mortgage lending even further

“We predict that assessment rates will increase and there will be a spotlight on customer declared living expenses,” George Samios of Madd Loans said.

“We also believe LVRs will start to reduce for high density units in metropolitan cities around Australia, as there are concerns of oversupply and under-demand for these properties.” 

Investors Choice Mortgages’ Jane Slack-Smith agrees that banks will be paying closer attention to applicants’ living expenses.

“Soon we will see attention switch to owner-occupiers, kicking off with justification on interest-only loans,” Ms Slack-Smith said.

“With out-of-cycle rate rises expected in 2016, the lenders are sending a very clear message that the good old days are gone.”

However, one broker says that by tightening lending criteria, banks are failing to understand the changing nature of employment. Steve Milligan of Launch Finance Mandurah told The Adviser that the lenders “can’t seem to grasp” the shift for employers to hire staff on a casual basis.

“This is a reality of employment today. These days, more and more employers are electing to employ their staff this way,” Mr Milligan said.

Meanwhile, Mortgage Express’ Tracey Pye pointed out that in making such policy changes, banks are “testing the waters”.

“Should their market share wane, they will again make the changes to get back on board,” she said.

Smartline’s Cathy Anderson sees this trend as an opportunity for brokers.

“I think that mortgage brokers will be able to add more value than ever to the process of obtaining a loan,” Ms Anderson said.

“I see it as a key part of my role to constantly monitor the changing environment to understand and explain what it might mean for my clients.”

Mr Samios agrees that such changes, if implemented, will make mortgage brokers “more attractive for customers”.

[Related: Award-winning broker warns investors as challenges loom]