In attempt to avoid mortgage risk, financial analysts believe that Australia’s big banks are looking to tighten lending through heavier restrictions.
Major lenders may soon be introducing different lending criteria and stricter servicing requirements as they look to reduce the amount of risk they carry on their mortgage books.
Since the dial has been turned up in terms of the capital requirements banks are facing, it is no surprise that there is a general movement towards heavier restrictions on loans.
In late September, Fairfax media revealed that NAB has two groups of Australian postcodes identified as either being “areas where significant deterioration in credit risk has been observed” or “areas which are exhibiting characteristics which may indicate future deterioration in credit risk.”. But this doesn’t mean we will see banks refusing home loans for these postcodes.
However, it is likely that Loan to Valuation Ratios (LVRs) are going to be dialled back, meaning that not only will it be harder to meet LVRs, it’s also going to be harder to get interest only loans and there could be changes to terms and conditions, such as risk premiums on loans for certain areas.
So if you are looking to purchase property, speak with a member of our Mortgage Broking team at CSM on 02 9299 7044 to get started on securing a loan before restrictions tighten.