It’s getting harder for property buyers to get a home loan and brokers are warning things are only going to get tougher in the wake of the banking royal commission.
Banks continue to tighten lending criteria and Reserve Bank governor Philip Lowe has come out and said last week that households might find it increasingly hard to have success getting mortgage finance as a result.
“It is possible that lending standards in Australia will be tightened further in the context of the current high level of public scrutiny,” Dr Lowe said.
Those in the property market recently will be well aware that the big banks have already clamped down on interest-only mortgages and loan-to-valuation ratios in recent years.
Chief executive of the nation’s largest broker network, David Bailey, said banks were now more aware of the true state of household debt levels and were under increasing scrutiny.
“Certain lenders are starting to understand that rather than rely on a standard benchmark, they need to also now understand a customer’s discretionary spend,” he told The Australian.
“Ultimately by that nature we will see a greater understanding of a customer’s day-to-day expenses rather than a wholesale benchmark.”
David Seaman from Mortgage Group says the best bet for borrowers in the current climate is to get rid of any other debt.
“If you’re on an income of $65,000 the only way you’ll get a loan is if you have no credit card, no debt whatsoever,” he told The Australian.
“There’s good and bad things about that. My advice to clients would be to get rid of any debt.”
Mr Seaman said the royal commission was sure to increase the scrutiny on banks and damage the economy.
“You can’t have the banking industry scrutinised in the way it is without having a negative effect on the economy.”