More changes in lending for buyers
The major banks have responded to regulatory concern about rising household debt through increasing the requirements around the amount and type financial information property borrowers disclose in their mortgage application.
Most lenders recently introduced new policies to improve the quality of information from an applicant in terms of their financial capacity to service a loan. Details of spending on food, clothing, vehicle costs, utilities, insurances, property maintenance, telephone, entertainment and education expenses are required in a borrowers loan application.
Westpac took it a step further, increasing what it wants to know about applicants' financial commitments, ranging from reverse mortgages to lines of credit. The changes are also applicable to its subsidiary institutions including Bank of Melbourne, St George and Bank SA.
NAB is expanding its tough changes to credit policy - that originally only targeted interest-only borrowers - to all new home applications. Other smaller lenders, such as Bendigo and Adelaide Bank, will also require more information from borrowers about the type of property being purchased.
These are the latest moves in an ongoing effort by banks to improve the quality of their loan books and eliminate any risk of borrowers providing inaccurate or incomplete information, which could result in difficulty servicing a loan if rates rise, or personal circumstances change for the worse.