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Credit Union Australia (CUA) has made significant changes to its lending criteria for a "popular and growing segment" of the nation's property market.
The lender announced that it has revised its lending criteria for high-density apartments.
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“We’ve reviewed our lending policy so that we can provide additional financial options to our members in what is a popular and growing segment of Australia's property market,” CUA general manager of sales Andy Rigg said.
“Many people looking to purchase an apartment are first home buyers and we know how hard it can be for them to save for a deposit and get a foot in the door of the property market.”
CUA has updated a number of aspects of its lending policy relating to home loans for high density apartments, including amending the definition of ‘high density apartment’ to apply only to apartments in buildings of six or more floors, or more than 50 apartments (up from four floors and 30 apartments previously).
Borrowers purchasing an apartment in buildings of less than six floors, or 50 apartments or less, will be subject to the same criteria as those purchasing a house and won’t need to meet the tougher high density apartment lending criteria.
In addition, CUA is allowing owner-occupiers buying an existing unit to now borrow up to 90 per cent of the value of the property (or 85 per cent for a new unit) with lenders mortgage insurance — up from 80 per cent previously.
The credit union believes this will assist additional borrowers to qualify for finance, where they would previously have required a minimum 20 per cent deposit.
CUA is also adjusting the maximum LVRs for high density apartments valued at up to $1 million — different caps will apply based on whether it is a new (up to 12 months old) or existing apartment, and depending on whether the purchaser is an owner-occupier or investor.
“On the whole, these changes are designed to help more apartment buyers to qualify for a CUA home loan,” Mr Rigg said.
“Some of the changes are also designed to manage the risks from forecasts of an apartment oversupply in some Australian cities in the coming two years.
“We want to assure home buyers that CUA is committed to helping Australians buy their own home, whatever type of home that might be.”
[Related: CUA makes significant rate cuts]
