Brokers urge lenders to adapt with market demands 

“We’ve seen some great strides forward recently with many lenders altering and adapting their serviceability policies to meet the current market conditions,” he said.

“This alone has given some form of relief for many Australian borrowers, especially those with equity in their home and a good repayment history allowing them to refinance without the added pressure of a growing serviceability buffer, now at 9 per cent.

“Servicing policies will need to be continually monitored moving forward.

“Hopefully there will be a regular reflection in this space as the market continues to evolve and ideally more lenders will decide to adapt similar simple/alternate refinance polices that will place Australian borrowers in a healthier position then they are currently in.”

Scott Beattie, from Cube Home Loans, also underscored the significance of specific lender offerings.

Mr Beattie emphasised the importance of the 85 per cent no LMI (lenders mortgage insurance) provision, describing it as occupying a unique space in the market.

“Especially if a client is just in LMI territory and doesn’t receive an LMI waiver for HGS and or professional waiver such as accountant, medical, etc,” Mr Beattie said.

“It’s particularly useful if someone would prefer to withhold some cash to undertake renovations shortly after purchase and or needs to debt consolidate to make a loan service.

“This could further reduce the likelihood of mortgage prisoners where LMI can make it cost prohibitive to change to a lender with a better rate.”

Meanwhile, several brokers have told The Adviser that borrowers are being hamstrung by lenders due to their valuations at the moment.

In recent months, issues have surfaced, notably lower-than-expected valuations leading borrowers into higher loan-to-value ratios.

Delays have also arisen due to what brokers describe as “unnecessary” full valuations.

Belinda Gibson, director at TM Finance Group, highlighted a specific instance involving clients purchasing a property under the government-backed First Home Buyers Guarantee Scheme.

Ms Gibson noted that despite the guarantee, Westpac rejected an application stating it was an 80 per cent purchase, insisting it was a 90 per cent loan-to-value ratio (LVR) and thus necessitated a full valuation.

She said that while “valuations are always low” and that there are several “niggling things banks are doing at the moment”, she added that she had never seen lenders come back like this before.

[Related: The Word: What loan products do you want to see more of]