the adviser logo

Adelaide Bank tightens serviceability policy

by Reporter5 minute read
Adelaide Bank tightens serviceability policy

The non-major bank has temporarily revised its serviceability policy in response to heightened credit quality risks associated with the COVID-19 crisis.

Adelaide Bank has informed Connective brokers that it has introduced changes to its serviceability policy for Connective Select white label loans.

To continue reading the rest of this article, create a free account
Already have an account? Sign in

Among the changes is a tightening of requirements for bridging finance applications. Effective immediately, Adelaide Bank will require all bridging finance applications to either:

  • have an unconditional contract of sale on the existing security; or
  • for the application to show servicing on the “peak debt” at interest-only repayments using the actual interest rate of the application, with no buffering of rate applied.

Moreover, Adelaide Bank has joined several other lenders in requiring brokers to ramp up their serviceability probes for self-employed applicants.   


The non-major is requiring brokers to identify whether self-employed borrowers have been impacted by the COVID-19 pandemic.

In particular, brokers have been asked to explore:

  • whether the applicant’s business has sought relief assistance from governments or lenders, and
  • whether the customer’s business operates within an industry highly impacted by the COVID-19 crisis.

Self-employed applicants deemed to have been affected by the crisis will be required to provide the following supporting documentation:

  • three most recent quarters of business activity statements,
  • three most recent months of bank statements for the business’s main trading account, or
  • a business plan or cash flow forecast as to explain how a business will continue to meet repayment obligations.

Adelaide Bank joins a number of other lenders in tightening its serviceability standards for new lending amid forecasts of a spike in defaults.

Last month, S&P Global Ratings reported that it is forecasting an 85 bps increase in credit losses across the Australian banking sector’s loan portfolio in the 2020 financial year (FY20).

The 85 bps increase, which is expected to moderate to 50 bps in 2021, amounts to approximately $29 billion in gross loans, nearly six times higher than the record low in FY19.

[Related: BOQ tightens home lending policy]

Adelaide Bank tightens serviceability policy
magnifying docu ta
TheAdviser logo
magnifying docu ta


You need to be a member to post comments. Register for free today


daniel tuttlebee resimac asset fInance ta l27zun

Resimac takes controlling stake in Sonder

Resimac Asset Finance has expanded its acquisition stake in equipment finance business Sonder Equipment Finance...

asic ta 2

ASIC seeks ‘common-sense solutions’ to breach reporting

The Australian Securities & Investments Commission (ASIC) has committed to “improving” the operation of the...

andrew mills homestart ta htfetw

HomeStart drops graduate loan deposit to 2%

HomeStart Finance, a non-bank lender backed by the South Australian state government, has lowered the deposit hurdle...

Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more