One in three people are unable to obtain a loan as a result of credit tightening policies implemented by lenders
One Sydney-based Business Development Manager and former mortgage broker Hank Hong, says that one in three clients are unable to obtain a loan as a result of credit tightening policies implemented by lenders.
“It’s [credit tightening] affected servicing and how much you can actually lend based on incomes,” Mr Hong said. “Certain offers that they put into place, higher living expenses, certain buffer rates, have reduced what [clients] can borrow.
The BDM added that borrowers, who have previously obtained unsuitable loans, are now struggling to manage their mortgage repayments.
“Existing clients are coming back because they’re not being able to service the loans that they were initially approved for because of the tightening of the service calculations,” the broker continued.
“Going back two years ago, people were getting million-dollar loans — $1 million to $1.5 million — with just $80,000 incomes or combined incomes of $150,000.
“They were on fixed rates of 3.99 per cent on interest-only loans, which they could afford, but when these fixed rates come off and the interest-only comes off, those clients are going to struggle to make the P&I repayments.
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