A non-major lender has announced that it will no longer issue credit for off-the-plan property purchases and has tightened its serviceability assessment policy as part of its response to credit quality concerns arising from the COVID-19 crisis.
Teachers Mutual Bank Ltd (TMBL) has announced several changes to its serviceability assessment policy, lowering its threshold for secondary income.
The changes include:
TMBL also announced that it has ceased lending for off-the-plan purchases.
The revisions are effective for all new applications from 1 May, across TMBL’s brands, which also include Firefighters Mutual Bank, Health Professionals Bank and UniBank.
Mark Middleton, TMBL’s head of third-party distribution, told The Adviser that the changes were made to preserve the group’s credit quality in response to growing risks emerging from the COVID-19 crisis.
“These changes have been made to promote the sustainability of our book throughout this crisis,” he said.
“All of our four divisions have a solid volume of loans coming in at present, and we want to continue to encourage loan applications with strong credit quality.
“As always, we will continue to monitor the situation and consider all environmental factors when reviewing our policy.”
Other stakeholders in the lending industry have also adjusted their risk appetites, with mortgage insurer QBE Australia imposing an “embargo” on the provision of lender’s mortgage insurance to borrowers employed in industries hardest hit by the outbreak.
Deposit bond provider Deposit Power has also revised its underwriting policy for short-term deposit guarantees, doubling the equity requirement for home equity products from one to two times the deposit amount.
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