Borrow
Big 4 bank cracks down on mortgage applications
A major bank has announced that it will reduce the borrowing capacity for its customers as it tightens serviceability criteria for new mortgages.

Big 4 bank cracks down on mortgage applications
A major bank has announced that it will reduce the borrowing capacity for its customers as it tightens serviceability criteria for new mortgages.

ANZ has announced changes to its debt-to-income (DTI) policy for home loan applications, effective for applications submitted from 3 August.
At present, ANZ does not accept home loan applications with DTI greater than nine.
However, the major bank has informed brokers that as of 3 August, mortgage applications with a total value greater than seven times the borrower’s annual gross verified income “may be deemed unacceptable for ANZ mortgage purposes” and would be subject to “stricter credit criteria”.
The changes follow speculation over the quality of Australia’s credit, linked to the economic downturn caused by the COVID-19 health crisis.
S&P Global Ratings recently forecasted an 85 bps increase in credit losses across the Australian banking sector’s loan portfolio in the 2020 financial year.
The 85 bps increase, which is expected to moderate to 50 bps in 2021, amounts to approximately $29 billion in gross loans, nearly six times higher than the record low last year.
According to the Australian Banking Association (ABA), COVID-induced uncertainty has pushed approximately 800,000 borrowers into loan deferral arrangements, over 61 per cent of which are mortgage-holders.
ANZ chief executive officer Shayne Elliott noted that it currently has over 100,000 mortgages which are currently having deferral of payment, although he noted that conditions are improving.
“For many customers, their income hasn’t been as impacted as they first thought and they will begin making repayments. In fact, many customers are already back making their repayments, and this is a good outcome,” Mr Elliott said.
“There are, however, many customers on deferrals that remain in a difficult situation, and we will work through a range of measures, including restructuring loans and, in some circumstances, extending deferral periods.”
Investment management firm Morgan Stanley estimates that approximately 20 per cent of such borrowers would default on their debt, triggering a $4.3 billion rise in credit losses across the big four banks alone.
The ABA recently announced that banks would extend repayment holidays for up to four months for distressed borrowers unable to service their loan upon the expiry of their initial deferral periods (most of which expire in September).
However, Morgan Stanley analyst Richard Wiles has warned that loan deferral extensions could “require a reassessment of COVID-19 overlays”.
About the author

About the author


Loans
Home loan commitments crash for the first time since May
New loan commitments for housing have declined for the first time since May 2020, but months of growth have ensured records have been maintained, new data has shown. ...Read more

Loans
Fears of debt disaster with changing lending laws
A soaring property market combined with a federal government looking to wind back safe lending laws is a “recipe for disaster”, an industry expert has said. ...Read more

Loans
Changing policy only way to slow housing market’s ‘up-crash’
Australia’s booming property market could be slowed through the use of regulatory powers rather than a central bank intervention, an economist has said. ...Read more

Loans
Mortgage stress reaches 3-year low
Despite mortgage-holders experiencing record levels of comfort, red flags are emerging with financial stress tipped to rise, new research has revealed. ...Read more

Loans
How to reduce your home loan turnaround time
A surge in consumers looking to borrow continues to put pressure on lenders, leading to delays in processing times, research has revealed. ...Read more

Loans
Consumer advocacy groups fight to save safe lending laws
Twenty-two thousand Australians have joined the Senate economics committee hearing to fight against proposed changes to safe lending laws, which are designed to make it easier for consumers to get th...Read more

Loans
Banking industry continues support for struggling Australians
The banking industry has announced that it will continue to support Australian mortgage-holders who have been negatively impacted by the COVID-19 pandemic. ...Read more

Loans
Commbank announces green loans
Australia’s largest bank has announced a new green loan, which home owners can use to buy and install renewable technology in the family home. ...Read more

Home values up 30% (or are they); NFTs taking the world by storm, and why Keating thinks Aussies will be ‘poor’ in retirement
Listen now

Raging floods, the tech stock bubble and the ongoing SG debate
Listen now

Meet the Manager with Trilogy’s Philip Ryan: RBA rates and property price growth
Listen now

The continued property boom, ethical investing and engaging with your super fund
Listen now

Loans
Home loan commitments crash for the first time since May
New loan commitments for housing have declined for the first time since May 2020, but months of growth have ensured records have been maintained, new data has shown. ...Read more

Loans
Fears of debt disaster with changing lending laws
A soaring property market combined with a federal government looking to wind back safe lending laws is a “recipe for disaster”, an industry expert has said. ...Read more

Loans
Changing policy only way to slow housing market’s ‘up-crash’
Australia’s booming property market could be slowed through the use of regulatory powers rather than a central bank intervention, an economist has said. ...Read more

Loans
Mortgage stress reaches 3-year low
Despite mortgage-holders experiencing record levels of comfort, red flags are emerging with financial stress tipped to rise, new research has revealed. ...Read more

Loans
How to reduce your home loan turnaround time
A surge in consumers looking to borrow continues to put pressure on lenders, leading to delays in processing times, research has revealed. ...Read more

Loans
Consumer advocacy groups fight to save safe lending laws
Twenty-two thousand Australians have joined the Senate economics committee hearing to fight against proposed changes to safe lending laws, which are designed to make it easier for consumers to get th...Read more

Loans
Banking industry continues support for struggling Australians
The banking industry has announced that it will continue to support Australian mortgage-holders who have been negatively impacted by the COVID-19 pandemic. ...Read more

Loans
Commbank announces green loans
Australia’s largest bank has announced a new green loan, which home owners can use to buy and install renewable technology in the family home. ...Read more