By: Jessica Darnbrough
Over 80 per cent of brokers believe lending policy is tighter than it was a year ago, according to a recent poll.
The Adviser’s latest weekly straw poll, 80.5 per cent of brokers believe lending policy is tighter, while 10 per cent think it is more flexible and 9.5 per cent says it is on par with this time last year.
Smartmove broker Michael Letts told The Adviser that the banks had tightened their policy in all areas, but particularly in the “high risk” areas including High LVR loans.
“The banks are definitely becoming more wary of lending to anyone that requires lenders mortgage insurance,” he said.
“But I don’t think this is a bad thing for the industry, rather it encourages brokers to get all the right documentation in place the first time so that the loan is approved.”
1st Street broker Jeremy Fisher told The Adviser that with the costs of funds rising, he wouldn’t be surprised to see the majors tighten policy further in the future.
But while the majors are obviously tightening policy under the strain of the GFC, not all lenders feel the need to follow suit.
Some non-bank lenders are becoming more competitve, edging back into areas they had been sourced out of by the GFC.
Earlier this month, Australian First Mortgage launched its Complete Option self-employed lite doc loan, suggesting funding for the self-employed market was starting to open up.
And AFM is not alone. NMC and Provident Capital both recently expanded their product suite.
AFM’s national director of sales and marketing Iain Forbes told The Adviser that non-bank lenders were stepping into to fill the gaps created by the majors.
“While the banks continue to tighten their funding criteria, non-banks are stepping up to the plate in a bid to cater to the demand for high risk products,” Mr Forbes said.
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