Major bank announces changes to lending policies

by Julia Corderoy02 Jun 2015
NAB Broker has announced a range of changes to its lending policies, in the wake of APRA’s crackdown on home lending.

Effective 5pm on Friday 5 June 2015, new variable rates will apply for investment loans. According to communication from NAB to mortgage brokers, obtained by Australian Broker, the new investor loan variable rates range from 4.53% to 4.96% depending on the loan amount and LVR. 

For investor loans of $250,000 to less than $500,000, with an LVR up to 90%, the variable rate will be 4.63%. For loans less than $250,000, with an LVR up to 90%, the new variable rate will be 4.83%. 

Effective 5pm Friday 5 June 2015, new variable rates will also apply for Homeplus Low Doc loans. Variable rates will range from 4.74% to 5.04%, depending on the loan amount and LVR.

For Homeplus Low Doc loans of $250,000 to less than $500,000, with an LVR up to 75%, the variable rate will be 4.80%. For the same loan amount with an LVR from 75% to 80%, the new variable rate will be 4.85%.

For loans less than $250,000, with an LVR up to 75%, the new variable rate will be 4.95%. For the same loan amount with an LVR from 75% to 80%, the new variable rate will be 5.04%.

Further, effective Saturday 13 June 2015, the maximum LVR (including LMI capitalisation) for investment loans will be reduced to 90%.

Also effective Saturday 13 June, a loading will be applied on existing mortgage repayments as part of the serviceability assessment. This applies to existing loans which are not being refinanced or paid out as part of the application. 

The affordability rate used in the serviceability assessment will be also be amended, effective Saturday 13 June, to be the higher of 7.40% or 2.25% above the effective borrower rate. Currently a 7.40% affordability rate is used for all applications.

Finally, customers will need to provide evidence of non-NAB loan repayments. According to the communication obtained by Australian Broker, acceptable evidence will be based on loan type. 

For principal and interest loans, a loan statement and internet account summary or internet transaction listing no older than six months showing scheduled amount or minimum one month of loan repayments must be provided.

For interest only and line of credit loans, a loan statement and internet account summary or internet transaction listing no older than six months showing current limit and current interest rate must be provided.
 

COMMENTS

  • by Dan - Melbourne 2/06/2015 8:57:16 AM

    Well.....they were competitive :(

  • by Broker 2/06/2015 10:52:31 AM

    Don't you just love the lenders responses to APRA, tweak here and there and then just increase the interest rates, that should do it!!

  • by Greg Reid 2/06/2015 11:23:19 AM

    I worry about where the Australian economy is heading in the next decade and beyond with the mis-match of federal government policy and regulatory change by various government bodies. The left hand does not know what the right hand is doing, or more likely, does not care.
    Has anyone asked:
    Why is investor activity in residential property increasing?
    Is there a long term benefit if it does?

    The argument that low interest rates are a cause for greater investor activity is patently incorrect. The low interest rate should make greater incentive for new owner-occupiers as the rent vs. buy equation becomes more heavily weighted to owning.

    Perhaps the real reason lies in lack of confidence in the economy and share market volatility.

    With the ageing population, any measure to encourage long term wealth creation should be encouraged, not cracked down on.

    It appears that the Sydney housing market, dormant for nearly a decade since they had their last great spike in early 2000's, has spiked again and more than likely without any intervention will stabilise again for another decade. Instead we have regulators that apply a sledge hammer when they needed not do anything or could have targeted specific measures, lenders could have restricted LVR's to Sydney postcodes for instance, to temper that particular market. Instead they create greater profits to lenders in the form of higher interest rates to investors (remembering some of the rhetoric is investors are higher risk lending - although a recent RBA research papers said the risk of default was similar to owner-occupiers) and in theory will cause greater hardship to investors. How does that make any sense?

    As to some of the lender policy changes, NAB and others are now intending to assess other lenders debt at their assessment rates on a P&I basis, yet they want evidence of the debt - why - if they are going to load it anyway?
    Positive credit reporting should list all debt taken on (if the lenders would ever invest some of their hard earned profits to actually do something about it).
    It seems to me that the non-banks will become far more attractive than the majors in particular.