Bankwest updates credit policy, process and valuations

Among the changes announced, the CBA subsidiary has now made it mandatory for brokers to complete and submit a new form when lodging any new mortgage application – and for any applications in progress that have not yet received unconditional or formal approval (including pre-approvals). 

The lender has said that any applications that do not include the new COVID-19 Additional Responsible Lending Questions – Home Lending form will not progress.

The form includes two mandatory questions, which seek to:

• outline whether the applicant’s current employment/income situation could change, or has changed, as a result of COVID-19. If so, brokers will need to outline how it may impact the mortgagor’s ability to service any existing or new debts and expenses; and
• determine how to proceed with the application (or restructure the application) based on the customers’ changing circumstances. For example, this could take the form of a COVID-19 home loan payment deferral. 

Bankwest has said further details on completing the form can be found in a guide on its broker website.

“Our number one priority at this time is the wellbeing of our customers and as a responsible lender, we need to ensure any customers looking to take on new credit can afford their repayments,” the bank said.

The lender has also introduced a new policy around serviceability and eligible incomes, which will be used in addition to the current policies. For example, Bankwest will now require PAYG income documents to use their most recent salary payslip or bank statement. The documents must show the most recent salary credit and be no older than 31 days (for customers who are paid monthly). 

Moreover, PAYG applicants with overtime, bonus, commission, allowances and dividend income will no longer be assessed at 80 per cent. As of this week, those PAYG borrowers will be assessed at 60 per cent for servicing purposes (however exceptions may be made for those whose employment circumstances have not been affected).

Changes have also been made for self-employed borrowers, including statements that are no older than 14 days at the time of application.

In addition, Bankwest has also temporarily made changes to its valuation process. It will now accept alternatives to the standard physical inspection for valuations given the ongoing social distancing requirements. For example, Bankwest has said it will now allow its panel valuers to conduct an “external property inspection or a fully virtual inspection to avoid contact with the occupants”.

“These valuations will be treated as a regular full valuation from a policy perspective,” it said.

Commenting on the changes, Bankwest’s general manager for third party, Ian Rakhit, commented: “The wellbeing of our customers, colleagues and the community remains our number one priority during this time of uncertainty surrounding coronavirus. Never has it been more important for people to have a sense of safety and a place to call home, and it’s our job to support brokers in the critical role they play during this period.” 

“Our ambition is to be the best broker bank in Australia, and we can only achieve that by working closely with brokers and adapting to their rapidly changing needs. We want brokers and customers to know that we are open for business and committed to continuing our responsible lending throughout this period.”

He added that the mortgage processing and national BDM teams are “working around the clock to support brokers and their customers”.

Similar changes to credit policy are being made by other lenders, including Gateway Bank with major bank National Australia Bank (NAB) also rolling out new COVID-19 declaration forms this week. 

Bankwest’s parent company, Commonwealth Bank of Australia (CBA) has not yet revealed whether it will require brokers to complete a similar form for mortgage applications.

[Related: NAB clamps down on serviceability]