Powered by MOMENTUM MEDIA
SUBSCRIBE TO OUR NEWSLETTER SIGN UP
Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Westpac cracks down on borrower expenses

westpac logo westpac logo
Lucy Dean 4 minute read

Borrowers could be forced to wait for loan approval as a result of tightened expense-to-income ratio thresholds at Westpac and its subsidiaries.

The revised approval procedure is backdated to include all applications submitted from 7 July 2017 and will apply to clients at Westpac, St George Bank and Bank SA.

In a note released on 31 July, Westpac advised brokers that, as a result of updated expense-to-income ratio requirements, applications that don’t meet the threshold “may not result in an approval decision straight away”.

“Declined applications will require a submission to credit team for assessment and must include an explanation for the high level of expenses and details of how the customer will meet loan obligations and manage expenses.”

Advertisement
Advertisement

The bank recommended brokers undertake a “thorough and exploratory conversation” about clients’ financial situations, expenses and liabilities, as well as “capture” all clients’ declared expenses and make sure that before signing, clients have reviewed the loan application thoroughly.

Applications submitted prior to 7 July will be subject to the standard pipeline application re-assessment criteria.

In May, a report by JCP Investment Partners quoted an anonymous Sydney broker as saying: “If we included private school fees and child care costs, there would be no borrow.”

The report went on to claim that expenses are “quite simply fudged. . . . The banks appear to have weakened underwriting standards to pursue the asset-backed lend – sustaining credit-fuelled house prices.”

Westpac Group last week introduced a series of rate changes, including a 31-basis-point hike on investor fixed principal and interest loans at Westpac.

PROMOTED CONTENT


[Related: Brokers concerned about ‘loose’ branch lending]

Westpac cracks down on borrower expenses
westpac logo
TheAdviser logo

If you’re feeling overworked and overwhelmed in this fast-paced mortgage market, it’s time to make some changes, and the Business Accelerator Program can help! Early bird tickets are on sale now. Work smarter, not harder, this year.

westpac logo

 

more from the adviser
Darren Stratford Dianne Robinson Kristie Oldfield ta RedZed appoints BDMs, product manager

The lender for self-employed borrowers has appointed two BDMs in ...

digital money ta Wisr closes $5m raise

Wisr has wrapped a $5-million capital raise to accelerate its loa...

digital signatures Suncorp enables e-signatures on post-approval loan docs

The non-major bank has said that it will accept e-signatures on p...