Invest
Refinancing in 2019: Getting approval in a tougher credit environment
Strong credit scores and loan-to-value ratios will be crucial this year for investors looking to refinance, as investors continue to grapple with tougher lending conditions in this post-royal commission environment.
Refinancing in 2019: Getting approval in a tougher credit environment
Strong credit scores and loan-to-value ratios will be crucial this year for investors looking to refinance, as investors continue to grapple with tougher lending conditions in this post-royal commission environment.
With loan rejections on the rise as a result of tightened lending standards, investors hoping to apply for a refinance this year will need to have a closer look at their credit reports and equity.
According to recent research from Digital Finance Analytics (DFA), the home loan rejection rate is up 32 percentage points year-on-year. A survey of 52,000 households found that approximately 40 per cent of home loan applications were rejected in December 2018, up from 8 per cent in December 2017.
When divided into segments of the lending space, the highest rate of rejection was for refinance applications (48 per cent), followed by investors (11 per cent) and first home buyers (5 per cent).
However, there are a few steps that property owners can take to lower their chances of rejection.
Credit check
According to Nicole Cannon of mortgage broking firm Pink Finance, lenders typically require six-month bank statements when considering a refinance application. All debt – including credit cards, personal loans and home loans – must have perfect conduct, she says, and credit reports must show few enquiries in the last 12 months.
“If there are many enquiries, this may cause a lender to think there is an issue and question why they did not proceed,” she said.
“Credit reporting is now based on good and bad conduct. If you are over 15 days late [on a payment], a mark may go against your name and how late payments. This is not a default but it stays on your file for two years. Your credit score is important.”
Equity is key
As property values across Australia fall, more mortgage holders are beginning to worry about falling into negative equity. According to a new survey by ME, over 60 per cent of home buyers who purchased their property over the last three years are worried about owing more than their home is worth.
Many lenders will not approve a refinance application if the loan-to-value ratio is too high. In other words, if the mortgage loan is too large a percentage of a home’s current appraised value, or actually exceeds it, finding a lender for a refinance may be difficult without mortgage insurance.
Before applying, investors should check their equity, Ms Cannon said.
“As we are in an era where property values have dropped across the country, making sure you obtain a valuation upfront ensures that we have enough equity available to refinance, and ultimately stay under 80 per cent,” she says.
“Paying additional mortgage insurance can sometimes negate the benefits of refinancing.”
RELATED ARTICLES
Property
2026 property expansion? Why disciplined investors will wait — and where to play offence
A growing chorus of market practitioners is urging investors to pause portfolio expansion in 2026 as returns compress and policy settings tighten. The headline risk is less about price crashes and ...Read more
Property
Cost, red tape and capital: why Australia’s housing pipeline is shrinking — and how to rebuild it
Australia’s housing pipeline is being choked by a toxic mix of escalating input costs, regulatory drag and tighter finance. The result: mid-market projects stall while luxury builds proceed, pushing ...Read more
Property
Start 2026 strong: Turn property advice into a data-driven advantage
In 2026, property professionals who industrialise goal-setting and risk management with data and AI will capture outsized client value. The playbook is shifting from intuitive advice to measurable, ...Read more
Property
Solar for renters isn’t just social policy — it’s a new operating model for residential property
Queensland’s Supercharged Solar for Renters program, backed by the REIQ, reframes the ‘split incentive’ that has stymied energy upgrades in rentals. With rebates of up to $3,500 per property and joint ...Read more
Property
Holiday towns as assets, not postcards: How to invest where the beach meets the balance sheet
Summer seduces capital to the coast, but the smart money treats holiday towns like operating businesses, not lifestyle trophies. Demand is seasonal, regulation is variable, and returns depend on ...Read more
Property
First Home Supply: a $10b bet on 100,000 keys — and a reshaping of Australia’s build-to-sell pipeline
Can $10 billion translate into 100,000 front doors for first-time buyers — without overheating costs or stalling on approvals? The new First Home Supply program signals a pivot from demand-side ...Read more
Property
Navigating the crunch: A 2025 case study of Australia’s housing market and the operators who outperformed
Australia’s 2025 property market was defined by a stubborn supply squeeze and cost-of-living pressure—tempered by rate cuts and targeted incentives. Yet a cohort of developers, lenders and agencies ...Read more
Property
Australia’s mortgage rebound: a 19% surge that reshapes pricing, risk and distribution
New APRA figures show new home lending jumped 18.9% in the September quarter year-on-year, signalling a demand recovery despite elevated rates. The upswing intensifies a three-way contest between ...Read more
Property
2026 property expansion? Why disciplined investors will wait — and where to play offence
A growing chorus of market practitioners is urging investors to pause portfolio expansion in 2026 as returns compress and policy settings tighten. The headline risk is less about price crashes and ...Read more
Property
Cost, red tape and capital: why Australia’s housing pipeline is shrinking — and how to rebuild it
Australia’s housing pipeline is being choked by a toxic mix of escalating input costs, regulatory drag and tighter finance. The result: mid-market projects stall while luxury builds proceed, pushing ...Read more
Property
Start 2026 strong: Turn property advice into a data-driven advantage
In 2026, property professionals who industrialise goal-setting and risk management with data and AI will capture outsized client value. The playbook is shifting from intuitive advice to measurable, ...Read more
Property
Solar for renters isn’t just social policy — it’s a new operating model for residential property
Queensland’s Supercharged Solar for Renters program, backed by the REIQ, reframes the ‘split incentive’ that has stymied energy upgrades in rentals. With rebates of up to $3,500 per property and joint ...Read more
Property
Holiday towns as assets, not postcards: How to invest where the beach meets the balance sheet
Summer seduces capital to the coast, but the smart money treats holiday towns like operating businesses, not lifestyle trophies. Demand is seasonal, regulation is variable, and returns depend on ...Read more
Property
First Home Supply: a $10b bet on 100,000 keys — and a reshaping of Australia’s build-to-sell pipeline
Can $10 billion translate into 100,000 front doors for first-time buyers — without overheating costs or stalling on approvals? The new First Home Supply program signals a pivot from demand-side ...Read more
Property
Navigating the crunch: A 2025 case study of Australia’s housing market and the operators who outperformed
Australia’s 2025 property market was defined by a stubborn supply squeeze and cost-of-living pressure—tempered by rate cuts and targeted incentives. Yet a cohort of developers, lenders and agencies ...Read more
Property
Australia’s mortgage rebound: a 19% surge that reshapes pricing, risk and distribution
New APRA figures show new home lending jumped 18.9% in the September quarter year-on-year, signalling a demand recovery despite elevated rates. The upswing intensifies a three-way contest between ...Read more
