The major bank has introduced new requirements for serviceability assessments in lieu of the current virus-induced crisis, calling on brokers to make more rigorous enquires into a borrower’s financial position.
NAB has informed brokers that it has tightened its serviceability assessment requirements for new home loan applications lodged from 20 April.
The big four bank has asked brokers to make additional enquiries into a borrower’s financial position in light of the economic fallout from the coronavirus (COVID-19) outbreak.
The bank will now require brokers to complete a COVID-19-specific template as part of the home loan application.
The template would include considerations of a client’s job/income security and any COVID-19 relief assistance they have received or requested, including loan repayment freezes or the JobKeeper wage subsidy.
For JobKeeper subsidies, brokers will need to determine whether a customer is performing their usual duties and receiving their regular salary, receiving a higher salary due to the subsidy, or performing minimal duties or no duties.
Brokers are also being encouraged to ask additional “open-ended” questions to discern the broader impact of COVID-19 on a client’s financial position, including reductions to secondary income, (i.e. rental income, bonuses, and commissions), reduced working hours, or any future changes they’re aware of.
Steve Kane, NAB’s general manager, broker distribution, told The Adviser that the changes are designed to ensure that the bank continues to lend responsibly.
“NAB remains open for business and continues to support its customers through an incredibly challenging environment. In doing so we must continue to meet our responsible lending obligations, which [require] additional questions to be asked of customers,” he said.
“We continue to assess all applications based on a range of measures to ensure our customers are able to appropriately manage their home loan commitments, both today and in the future.”
NAB joins the likes of Bankwest, ING, Gateway Bank, MyState Bank, Heritage Bank, ME Bank and a number of non-banks have also imposed restrictions on such borrowers to maintain credit quality amid forecasts of a spike in defaults.
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.