Australia banks’ new loan criteria
13 July 2015 by News Desk
Banks in Australia have tightened their mortgage lending criteria and introduced caps on loans to property investors.
The Commonwealth Bank of Australia says that new borrowers’ existing debts and incomes are to be assessed more stringently. The bank will apply a servicing loading of 20% to all repayments on existing home loans and lines of credit held by customers. This means repayments that were assessed at $1000 a month will now be assessed at $1200 a month.
CBA also says it will accept only 80% of income from overtime, bonuses and investment income when it is assessing home and investment loan applications. The maximum loan-to-valuation ratio for all owner-occupied home loan applications would be 95%, compared to currently allowing LVRs of up to 97%, including the cost of mortgage insurance.
Westpac bank says it will require new property investors to lodge a deposit of at least 20%. The bank will cap loan-to-valuation ratios for new property investor loans at 80%. It is the toughest limit imposed by a major bank so far as ANZ Bank introduces its 90% cap for investor loans.
National Australia Bank last month capped investor home loans at 90%, while the Commonwealth Bank says it will not take the tax breaks investor borrowers receive from negative gearing into account when investor loans exceed 90%.
