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The major banks’ battle for borrowers appears to have quietened, with loans that might previously have been granted now declined. This month we ask…Are lenders beginning to rein in their enthusiasm for lending? If so, why?
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TIM CARABOTT, KeyInvest Lending Services
“The lenders I use frequently have relaxed their credit policies. This, combined with many still offering discounts of up to one per cent off the standard variable rate and heavily discounted fixed rates, indicates that appetite for lending appears sound. Sound lending could also be a reflection of the quality of mortgage broker that lending institutions are now dealing with, following NCCP’s introduction.”
RUAN BURGER, Home Loans Etc
“Lenders are looking closer at deals to ensure they’re good business...given the current market can change quickly, meaning funding could become more costly again. We all fear another GFC, so having a good book makes sense. More of an issue is a lack of lending consistency. It concerns me when lender assessors are as surprised as brokers with a bank’s decisions. If [banks] still have funds, I believe they will continue to lend as much as they can.“
PAUL WRIGHT, IPS Home Loans
“Lenders have actually increased their lending appetite to gain market share and the current pricing war is evidence of this. Due to low growth in home lending, lenders have loosened their credit policies in two key areas: genuine savings and LVRs. Several now allow rental payments to form part of the evidence of five per cent savings. Also, several lenders have re-introduced LVRs of 95 per cent...whether you are a client of theirs or not.”
STEVE MATSOUKAS, Defiance Consulting
“The effects of the GFC caused lenders to pay much more attention to risk and therefore many clients who would have previously qualified for a loan no longer do. Banks have reduced their appetite for higher LVR loans.Tightening of credit scoring has also increased the number of declined loans. Any credit impairment makes it much harder for clients to qualify and this, along with the demise of lo doc loans as a market segment, has made qualifying harder.”
GUY OBEID, CMFC Financial Services
“In business and construction finance, lending appetite overall is tightening but there will still be temporary patches of loosening in different segments and transaction value ranges. With global liquidity shortages, many foreign players have left the market; those that remain have plenty of transactions to choose from. The banks can maintain a tight lending stance but still write more than enough transactions.”
