Westpac will announce changes to its borrowing terms and conditions for local and foreign housing property buyers on partner visas next Monday, said a report.
The Australian Financial Review
reported yesterday (30 January) that the changes will restrict appraisal of residential values and borrowers' ability to repay.
From 5 February, desktop valuations – which are based on computerised or photographic evidence – will be used only for a maximum LVR of 90%.
The bank is also updating its household expenditure measure, which is used to assess borrowers' ability to repay their loans. A Westpac spokesperson told Australian Broker
that the bank's household expenditure measure is updated in line with the benchmark published by the Melbourne Institute for Social and Economic Research.
Greg Cook, senior credit advisor at mortgage brokerage firm Loan Market
, welcomed these changes, saying that the banks are working to ensure that they have good credit policies in place for borrowers, in case there is a downturn.
"The more the banks look at their lending practices, the stronger our industry is. The more that they change their policies on a regular basis, the more valuable the mortgage broker is," he said.
At the same time, the bank is relaxing its lending policies for holders of partner visas and borrowers relying on income from a second job.
From 5 February, holders of 309 and 820 partner visas, which allow the partner or spouse of an Australian citizen, permanent resident, or eligible New Zealand citizen to live in Australia, will be able to borrow with Westpac if their LVR is up to 90% (from up to 80% previously).
Instead of two years, borrowers will need to have held a second job with the same employer for only one year, for their income to be acceptable. Borrowers and brokers are expected to welcome this change, given the growing number of casual workers in Australia.
The new changes follow Westpac's announcement last month that it would require home loan borrowers to disclose what they owe on short-term buy-now, pay-later loans on digital credit platforms like AfterPay and ZipPay. The move was part of the bank's effort to bolster its assessment of borrowers' loan serviceability.
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