Funding costs hurt borrowers

Staff Reporter Thursday, 20 May 2010 3 minute read

By: Jessica Darnbrough

Australia’s banks are imposing hurdles on borrowers that prevent them from getting a loan, according to Aussie.

The non-bank financial services group’s chief executive officer Stephen Porges said money sourced from global credit markets is now priced considerably higher than it was a few years ago, which means banks can and are being selective as to who they lend to.

“In effect, they’re cherry-picking potential customers with the best capacity to repay debt and are imposing hurdles on the others,” he said.

Mr Porges said unfortunately, the majority of borrowers are unaware of these hurdles – which vary from bank to bank, and as a result their applications are rejected through no real fault of their own.

“Being rejected for a loan could adversely affect their credit rating, and in turn this could also affect them the next time they go to a financial institution to borrow money.”

Mr Porges said he is advising all Australians that are considering purchasing a home to use a mortgage broker to help them obtain finance.

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