Westpac will announce changes to its borrowing terms and conditions for local and foreign housing property buyers on partner visas next Monday, said a report.
The Australian Financial Review reported yesterday (30 January) that the changes will restrict appraisal of residential values, borrowers’ ability to repay, and eligible visas for housing loan applications.
The bank will tighten lending to holders of 309 and 820 partner visas, which allow the partner or spouse of an Australian citizen, permanent resident, or eligible New Zealand citizen to live in Australia. Borrowers on the partner visas will need an LVR of 80%, down from the current 90%.
On the other hand, the bank is relaxing its terms for borrowers relying on income from a second job. Instead of two years, borrowers need to have held a second job with the same employer for only one year, for their income to be acceptable. Borrowers and brokers are expected to welcome this, given the growing number of casual workers in Australia.
The report also said that Westpac is updating its household expenditure measure, which is used to assess borrowers’ ability to repay their loans. It did not specify what changes are being introduced.
Meanwhile, desktop valuations – which are based on computerised or photographic evidence – will be used only for a maximum LVR of 90%.
Greg Cook, senior credit advisor at mortgage brokerage firm Loan Market, welcomed these changes, saying that the banks are working to ensure that they have good credit policies in place for borrowers, in case there is a downturn.
“The more the banks look at their lending practices, the stronger our industry is. The more that they change their policies on a regular basis, the more valuable the mortgage broker is,” he said.
The new changes follow Westpac’s announcement last month that it would require home loan borrowers to disclose what they owe on short-term buy-now, pay-later loans on digital credit platforms like AfterPay and ZipPay. The move was part of the bank’s effort to bolster its assessment of borrowers’ loan serviceability.
The bank said then that borrowers with such loans have liabilities that must be captured in the loan application, along with the monthly repayment.