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The regional bank has made a number of changes to its mortgage lending policy, which include measures to both ease and tighten requirements for the assessment of credit applications.
BOQ has announced that it will be updating its home loan policies, with changes to apply to all retail lending applications received on or after Monday, 17 June.
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The bank’s changes include:
- Increasing the minimum age for exit strategies
- Acceptance of third-party bank statement providers
- Acceptance of overseas income (Australian citizens living and working overseas)
- Acceptance of video conference calls for remote loan interviews
- Removal of Brisbane-specific, high-density apartment and unit requirements
- Changes to income validation for self-funded retirees
- Changes to security valuation requirements
- Updates to the servicing calculator
Increasing the minimum age for exit strategies
BOQ has informed brokers that it will increase the minimum age criteria for which applicants must demonstrate future income sources or financial position, from 45 to 50 years old.
The bank also noted that an exit strategy must be included where the borrower is aged over 50 and will be 70 years old or above at the end of the proposed loan term.
Acceptance of third-party bank statement providers
BOQ will now accept bank statements if they are either original documentation issued directly by the financial institution or online digital providers.
Acceptance of overseas income (Australian citizens living and working overseas)
For Australian citizens living and working overseas, the inclusion of specific overseas income will now be acceptable income.
However, BOQ noted that earnings must be PAYG from an ASX 200-listed company, an Australian government agency or large multinational company.
BOQ stated that income is to be shaded at 80 per cent, with income to be validated via a payslip or Australian tax return in conjunction with an employment letter/contract, and the last three months’ salary credits to a savings transaction statement.
Acceptance of video conference calls for remote loan interviews
Where a face-to-face loan interview is not possible to be conducted for new borrowers or guarantors, BOQ will permit loan interview to be conducted via a video conferencing service.
However, the bank added that customer identification must be satisfied in line with the bank’s operational processes.
Removal of Brisbane-specific, high-density apartment and unit requirements
Brisbane high-density post codes will revert to standard nationwide high-density requirements, with the specifications removing unit size prerequisites and car space requirements.
Changes to income validation for self-funded retirees
BOQ will now require 80 per cent of net income from the lower amount of the last two years for self-funded retirees.
The bank noted that the changes are designed to align servicing with “actual earnings” rather than gross income.
Changes to security valuation requirements
For loan applications with an LVR above 70 per cent, the acceptance of full valuations, AVM or desktop valuations on metropolitan Sydney and Melbourne securities will be capped at a maximum six-month period.
Updates to the servicing calculator
BOQ has also updated its servicing calculator to reflect the Australian Securities and Investments Commission’s (ASIC) changes relating to the assessment of credit card debt for home loan and personal loan applications.
ASIC introduced the new guidelines following a review (REP 580) into credit card lending in Australia, in which it looked at 21.4 million credit card accounts open between July 2012 and June 2017.
ASIC’s review found that there were over 14 million open credit card accounts as at June 2017, with outstanding balances totalling almost $45 billion.
[Related: Westpac announces changes to mortgage product features]
