Banks are offering first home buyers far lower loan amounts than they were two years ago, according to the results of a new mystery shopping exercise.
Conducted by Macquarie Group, the investigation saw members of a team led by analyst Victor German pose as potential borrowers at CBA, ANZ, NAB, Westpac, St George, Bankwest, Bendigo and Adelaide Bank, Bank of Queensland
Each mystery shopper told the bank they were a first home buyer considering an owner occupier or investment loan. Talking to these banks, each individual stated that their wage was $105,000, they had general living expenses of $1,200 a month, were paying $1,300 a month on rent, had no dependants, and had a clear credit history.
The results, which were sent out in a note to clients on Tuesday (13 June), found that on average banks are lending 14-19% less to owner occupiers and 12-26% less to investors than they were two years ago.
Macquarie has conducted the same exercise with the same criteria for three years running now. In 2015, the majors were willing to lend between $650,000 and $700,000 to an owner-occupier satisfying the above criteria. In the latest study, the banks only offered between $550,000 and $600,000.
The research found that CBA and Westpac were willing to lend slightly more than they did last year while ANZ and NAB were prepared to lend slightly less.
With banks using stricter living expense criteria and more conservative interest rate buffers, Macquarie’s analysts predicted a “further tightening in borrowing limits” in the future. They pointed to banks in the US and UK which lend 20-25% less to owner-occupiers than local banks here in Australia.
Current lending by the banks remains above 2011 levels however, the analysts said.
Investors to feel the pinch in property overshoot
Major bank upgrades serviceability criteria
Average FHB age stable for two decades