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Auswide classes off-the-plan lending as ‘unacceptable’

by Lucy Dean10 minute read
Auswide classes off-the-plan lending as ‘unacceptable’

Auswide Bank has announced a raft of changes to its credit policy, stripping off-the-plan purchases and owner-builder loans from its acceptable loan list.

The changes were announced on 18 July and are effective immediately. The bank has also classed unregistered land, display homes, serviced apartments, NRAS properties and over 55s complexes as “unacceptable borrower, securities and loan types”.

Charlton Nevis, general manager of third-party and strategic alliances and business banking at Auswide Bank said the credit policy changes were "business as usual" and that the changes came about "for no particular reason other than our primary segment is focused on other segments of business".

"Those that were called out... were a series of segments that we don't do a particular great volume in, so we've taken the opportunity to exclude them."


He added that the decision was "on the basis of a combination of all of those factors", including both the value and risk propositions of those loan, security and borrower types.

"Essentially, whenever the bank does a review of its credit and its target markets, then there's always some shaving and exclusions and inclusions, so this is nothing other than that," he said.

"We don't get a lot of enquiries for things like owner-builder, for example. So we don't see it as core to our business and we don't see it as material in terms of the change."

Other changes

Additionally, the minimum apartment floor size (excluding balconies and car parks) has been reduced to 40 square meters.

Further, for clients seeking cash out or equity release products, they now must prove a satisfactory repayment history over the previous six months.

They are also required to provide full disclosure of their use of funds excluding future investment. In the instance where cash out is more than $100,000, Auswide Bank will now control the release of funds.

Commenting on the changes to the equity release requirements, Mr Nevis said: "We want to be able to give our brokers a clearer pathway in terms of understanding whether a particular scenario will suit and fit us, so that was the purpose of that piece there.

"It all, of course, will go very much to the heart of our intention to be assessing each application that we get on the basis of the purpose and objectives of the application and to ensure that from our perspective, the application is reasonably sound and it supports the client's objectives."

Auswide Bank's changes to its equity release guidelines follow a number of industry movements pulling away from reverse mortgage offerings. 

[Related: Auswide increases rates for investment loans]

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