Adelaide Bank is introducing an alert system that will monitor property borrowers that are struggling with their repayments.
The bank and its subsidiaries and affiliates will compare monthly mortgage repayments with borrowers’ income ratios.
“As part of our ongoing commitment to responsible lending, we are introducing the visibility of metrics relating to loan to income and monthly mortgage repayment to income ratios into our serviceability calculator for new loan applications – at the application stage only,” said Darren Kasehagen, Adelaide Bank’s head of business development and strategy.
Kasehagen told Australian Broker that additional commentary from the broker will be required when these internal guides are exceeded.
He stressed that this only applies to new loans.
“There is currently no change to our monitoring of existing loans,” he said.
The Australian Financial Review reported yesterday (8 February) that loans that exceed the bank’s guidelines will prompt a “diary note commentary” to alert the bank of possible mortgage stress.
The report said that this will automatically happen where the loan-to-income ratio exceeds five times or monthly mortgage repayments exceed 35% of a borrower’s income.
“The bank is telling third parties the data ‘is only required for internal purposes’,” said the AFR.
It attributed the bank’s move to an effort by lenders to prevent problem loans amid concern over rising household debt.