Rising property prices and pressure from banking industry regulators such as APRA are making most major lenders review how they assess borrowers for loans.
A large number of changes are in effect now across most lenders and will likely affect buyers who have existing finance pre-approvals.
The interest rate and credit policy areas of all lenders vary greatly. It is more vital to now to link with a lending specialist who can assess your position across a range of lenders. This helps you maximise your options, and also helps you access the right lending product.
Recent changes across all lenders that may affect you
- All lenders now apply higher living expenses to their affordability assessments, which may affect your borrowing capacity. Each lender is different and some lenders increase your living expenses in line with increased income levels.
- Most lenders now look at your total liabilities and apply loadings to some outside debts (mainly existing mortgages) when assessing your borrowing capacity. This may reduce your capacity with some lenders. There are also lenders who have removed negative gearing benefits.
- High lending to valuation ratio (LVR) loans have very strict assessment criteria. Some lenders have significantly reduced the limit they will lend to you. Your credit history, employment and overall position are now assessed in even greater detail.
- Some lenders have reduced their maximum LVR limits in NSW.
Investor’s hit harder?
- Investor loans will no longer receive rate discounts. Regulators want lenders to reduce the amount of investor loans being approved. In response to this, most lenders are removing interest rate discounts for investors. Some good news is that lenders are now trying to approve more owner occupied loans so there are still some great offers available for buyers and refinancers.
- To limit the number of investor loans being received, most lenders now charge investors higher standard interest rates, compared to owner occupied loans.
- Borrowing capacity for investors with multiple property holdings may be reduced with some lenders.
Should you be concerned?
Simply put, no. However, it does pay to be smart and link with a lending professional who works for you – and has access to multiple options.
If you have an existing pre-approval to buy property we recommend you have this reviewed before making any commitment on a home purchase.