Adelaide Bank’s decision to launch a new low doc product last week has given mortgage managers a much needed funding boost.
Showing that the low doc space is far from dead, Australian First Mortgage is gearing up to launch a series of policy enhancements to its Flexible Option Lo Doc Plus product, while Better Mortgage Management has launched a new low doc mortgage.
BMM’s new Low Doc PLUS product will feature an increased threshold for LMI from 60 per cent to 70 per cent LVR, and will provide self-employed borrowers with the opportunity to refinance their loans at a higher LVR to access additional equity without the requirement to supply BAS or trading statements.
Similary, AFM has also removed the need for BAS statements in its policy changes.
From Monday 27 September, AFM will ask the borrower’s accountant to verify their income.
These changes suggest the industry is starting to return to its traditional banking principles.
Last week Adelaide Bank’s general manager third party distribution Damian Percy told The Adviser that low doc products had, in recent years, veered away from their true client – the self-employed borrower.
“By returning to traditional banking principles, we are ensuring that low doc products will only cater to its true target market. For the right borrower, getting a low doc loan will be a simple process. For the wrong borrower, the process will be a lot more difficult,” Mr Percy said.