As banks continue to tighten their home lending policies in response to regulatory pressure and the negative press surrounding the royal commission, Australia’s top brokers are finding it increasingly difficult to help their clients.
ANZ has become the latest lender to tweak its credit policy for home loan borrowers. Late on Friday, the major bank notified aggregators that it has made changes to minimum living expense values.
It is now common for lenders to ask for 29 fields of expenses when assessing a mortgage application. Some banks that previously required no bank statements from applicants are now asking for up to six months’ worth of transaction account information to verify living expenses.
In many instances where banks find that an applicant’s living expenses for a certain item are higher than declared, brokers must go back over their client’s records to explain “one-off” expenses to the lender, such as a renovation cost or an overseas holiday. This process is creating significant delays in the settlement process.
Some of the industry’s most successful brokers have told The Adviser that the environment has become extremely tough, but most believe the credit squeeze will be short-lived.
“As a broker running a business that settles over $200 million a year, we don’t normally get declined by lenders,” one award-winning broker told The Adviser. “But I’m getting declined now.”
Refinancing has become particularly difficult in the current climate, with many borrowers failing to switch to a different lender and a better rate.
Last week, The Adviser ran an editorial that highlighted how Australia, like the UK, is beginning to see a number of “mortgage prisoners” shackled to home loans as a result of tighter credit policies and increased regulation.
One broker told The Adviser that he has started repricing loans for clients through their existing bank when they are unable to refinance.
“I’m doing a lot of that. I go back to the lender and negotiate a better rate. There is nothing in it for me in terms of remuneration, but the customer is getting a better deal,” the broker said.
More to come.
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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