the adviser logo

Lender lowers debt-to-income threshold

by Reporter5 minute read
Lender lowers debt-to-income threshold

A non-major bank has adjusted its risk appetite amid ongoing credit quality risks associated with the COVID-19 crisis.

Teachers Mutual Bank Ltd (TMBL) has announced further revisions to its credit policy, effective from 1 July across all of its brands (Teachers Mutual Bank, Firefighters Mutual bank, Health professionals Bank and UniBank).

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

As part of its ongoing response to ongoing credit quality risks linked to the economic fallout from the COVID-19 crisis, TMBL has reduced its debt-to-income (DTI) ratio – calculated with the applicant’s total financial debt commitments divided by their total gross income – from a maximum of 8, to a maximum of 7.

“This policy has been reviewed to ensure the bank maintains sound residential mortgage lending practices and continues to meet the regulatory obligations detailed by APRA,” TMBL told brokers.


This is the latest of a number of credit policy changes introduced by TMBL over the past few months.

In May, TMBL announced that it would cease lending for off-the-plan property purchases in response to growing credit quality risks emerging from the COVID-19 crisis.

TMBL also lowered the threshold on several secondary income types for home loan serviceability assessments and hiked interest rates across two and three-year fixed owner-occupied and investment home loans by 5 bps.

“These changes have been made to promote the sustainability of our book throughout this crisis,” TMBL’s head of third-party distribution, Mark Middleton, has 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.”

Several lenders across both the non-bank and ADI space have reduced their risk appetites in recent months in response to the economic fallout from COVID-19.

Analysts, including Moody’s vice president and senior credit officer Alena Chen, continue to forecast a sharp rise in credit losses over the coming months, particularly once mortgage deferral period expire in September.

However, some credit providers, including non-bank lender Bluestone, have rolled back some of their restrictions in recent weeks amid renewed optimism from the Reserve Bank of Australia, which stated that an economic recovery may be nearer than initially anticipated amid the easing of lockdown restrictions.

[Related: Bank excludes JobKeeper payments from serviceability test]

Lender lowers debt-to-income threshold
bank money business finance investing
TheAdviser logo
bank money business finance investing


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