Lenders Tighten Borrowing Conditions
Monday, 15 December 2008
While interest rates are now at the same levels they were in 2001, those applying for a loan now face far more stringent conditions. Following deregulation a fiercely competitive environment saw many lenders launch products including no deposit and no doc loans. Since the collapse of the credit markets, Australian lenders are being far more prudential, phasing out the more risky products from their range.
The ANZ Bank will now only lend up to 90% of a home’s value, while the Commonwealth Bank will lend just 80% without requiring mortgage insurance. Banks are also maintaining bigger margins, with many not passing on all of the Reserve’s cuts.
Many of the non-bank lenders who previously specialised in higher risk segments of the market have also been forced to tighten their lending conditions. Borrowers who don’t meet strict criteria must now pay a premium to secure funding for their purchase.
