Podcast: Play in new window | Download
Subscribe: RSS
In today’s podcast I discuss the bank changes we’ve seen over the past 5 days in response to Covid. In short, many banks are making it harder again, particularly for borrowers in the hard hit sectors – tourism, hospitality, entertainment and retail.
In fairness, only a small number of banks have already announced Covid related policy changes, and the trend seems to be skewed more towards the smaller lenders. Many banks are still lending, however from a responsible lending standpoint I’m anticipating more scrutiny over the weeks and months ahead.
Here are examples of policy changes we’ve seen announced recently…
Pepper Money:
As of 31/03/2020 Pepper announced that they are restricting their maximum loan size to $1,000,000, previously you could go to $1,500,000 for a full doc application with security property in Melbourne or Sydney metro.
Bluestone:
- Interest rates across all products and LVR tiers are increasing by 0.35%
- Loading of 0.50% will now apply to all investment loans
- Maximum loan ratio of 80% will now apply to all principal & interest loans. (75% for Interest Only) – previously you could go higher
- Cash-out/ equity releases disbursed directly to the borrower are now restricted to a maximum of $30,000
- Bluestone have temporarily suspended lending to all borrowers working in tourism, hospitality, entertainment, and retail
- Income derived from shares and dividends, holiday rentals, short term accommodation, overtime, commissions and/ or bonuses – are no longer accepted for servicing
Macquarie:
- Macquarie are now monitoring applicants in tourism, transportation (ex. public transportation and delivery services), hospitality, retail, sport, and arts & recreation more closely
- Applicants now need to evidence salary credits no older than 14 days prior to formal approval matching the most recent payslip
- For all self-employed applicants, regardless of industry, borrowers must now provide:
- BAS covering the period from the most recent financial statements to the application date. From 1 April 2020 they require March 2020 BAS, and
- Bank statements from at least 1 March 2020 onwards showing credits or deposits evidencing consistent trading income
There is every chance that loan activity will decline over the weeks and months ahead.
If your financial position is secure then there’s no doubt you have a significant comparative advantage.
——————————————————————————–
The Long Property Show provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. Nothing in the Long Property Show constitutes legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.
