Credit underwriting standards for home loans in Australia are set to tighten further this year. We have seen the beginning of this during 2009 with many lenders reducing maximum LVRs and restricting cash-outs.
This is likely to continue during 2010. Home loan buyers incurred additional costs in terms of a tightening of loan pricing, followed by non-interest fees and collateral requirements. Some of the new restrictions include the:
- phasing out of 100% home loans;
- low doc applicants required to provide BAS statement;
- limits on cashout;
- phasing out of bad credit construction loans and owner builder loans
The news may encourage bank customers to shop their home loan around, as securing credit becomes more difficult. This week the Herald Sun reported that about 350,000 Victorians currently have blacklisted credit reports for failing to pay utility bills, skipping loan repayments or declaring bankruptcy. The home loan options for these Victorians are quite limited.
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