Westpac tightens credit for self-employed amid COVID-19 risks


“These updates will help reduce risk for home loan applicants in some affected industries and areas, through measures such as lowering the maximum loan to value ratio.”

The bank, which in its recent profit results made provisions for bad loans based on a 15 per cent fall in house prices, said the changes would be temporary. The effect of the changes will be to require borrowers to stump up a bigger deposit to borrow the same amount, although in the current conditions home buyers may be less keen to take on the maximum amount offered by banks.

In a sign of tighter mortgage credit from smaller banks, Bank of Queensland also said it would require more detailed information about home loan applicants’ income from bonuses, commissions or investments when assessing loans. A note to brokers from BOQ said the changes would be temporary and were a response to the uncertainty created by the pandemic.

ME Bank also told mortgage brokers it would temporarily introduce changes that result in the lender assuming certain types of income, including bonuses, commissions and penalty payments, are treated more conservatively in applications for credit.

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