Mortgage marketplace HashChing has said banks need to find a middle ground when it comes to approving loans.
Chief customer officer Siobhan Hayden has said banks tightening their lending restrictions have “gone too far the other way” and are “rejecting loans unnecessarily”.
In a recent survey of brokers, 73% believed the majority of customers whose mortgages were converting from interest-only to principal and interest would be seeking refinancing.
However, with the tighter lending restrictions, 24% of brokers believed more than half of all refinancing applications would be unsuccessful.
Hayden said, “With approximately $120billion worth of interest-only mortgages converting to principal and interest mortgages over the next three years, it’s no surprise that 73% of brokers are predicting that most of the customers affected would be refinancing.
“For individual households, this change is expected to increase mortgage repayments by 35%, which means families will need to find any way they can to reduce costs.
“For mortgage brokers, there will potentially be a lot of business coming their way over the next three years with people looking to refinance their home loans.
“The tighter lending restrictions born out of the banking royal commission means we’ve gone from banks handing out home loans indiscriminately to rejecting loans unnecessarily.
“There needs to be a middle ground where both banks and borrowers are adequately protected, and we’re not there yet. Banks have now gone too far the other way, and they need to be a bit more balanced in their lending policies.”
The survey also showed that 91% of brokers felt that borrowers had a negative or neutral view of the housing market and lending conditions.
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