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Lender cuts buffer rate but tightens expense checks

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Charbel Kadib 5 minute read

A West Australia-based lender has announced changes to its home loan assessment policy following a review of its credit risk controls.

Keystart Home Loans has advised its broker network that it will be reducing its interest rate buffer by 25 basis points from 2.25 per cent to 2 per cent, effective for new loans issued from 1 February 2019.

The lender stated that the buffer rate reduction was designed to ensure it can “assist more Western Australian households into home ownership”.

However, also effective for new loans issued after 1 February 2019, Keystart has announced that as part of its “ongoing commitment to responsible lending”, it is “essential” that brokers discuss living expenses in detail with clients and review the available information to verify those expenses.


Keystart stated that a customer’s living expenses must be based on expenses incurred post-settlement, not their current expenses.

“This means that housing-related expenses such as shire and water rates, utilities and home maintenance must be allowed for,” the lender said.

Keystart continued: “Where expenses are low due to the customer’s current living arrangements (e.g. boarding at home) then [brokers] need to discuss with the customer what their realistic expenditure will be once they have moved into their new home.”

The lender added that its assessors would be looking at the reasonableness of the declared expenses and whether the figures align to the evidenced spend on the transactional and credit card statements.

“Submission notes will need to evidence that you have discussed living expenses with your customer and that you reviewed available information in verifying those expenses,” the lender said.


Keystart advised brokers to determine whether it is in the interest of customers to lodge their application prior to, or after, 1 February 2019.

“To do this, you should input an assessment date of 1 February 2019 into the [Loan Assessment Tool] or use the Offline Assessment Tool.”

[Related: Non-bank tightens expense reporting obligations]

Lender cuts buffer rate but tightens expense checks
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Charbel Kadib

Charbel Kadib

Charbel Kadib is the news editor on The Adviser and Mortgage Business.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

Email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.


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