Non-major eliminates negative gearing tax benefits
Non-major lender Bankwest has confirmed that it has updated its loan applications by removing negative gearing tax benefits for borrowers.
The bank’s serviceability calculators were updated on 10 February, eliminating these benefits in line with regulatory guidance, a spokesperson told Australian Broker.
“This change aligns Bankwest with industry best practice and guidance from regulators, specifically APG 223 within the Residential Mortgage Lending prudential practice guide.”
APG 223 summarises a number of prudent lending practices for residential mortgages including the need for:
“For customers who operate their investment property at a loss, where the income of the investment property does not exceed the costs, the related tax benefit will no longer be included in Bankwest's calculation for serviceability of the loan,” the spokesperson said.
The changes will impact all new applications involving an investment lending facility as well as any existing deals which may require a new serviceability calculation.
Bankwest has announced these changes to its loan application criteria less than a week after it pulled the plug on new investment lending for customers seeking to refinance their standalone investment.
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- Credit risk assessment within the lender’s risk management framework
- Sound loan origination criteria
- Security valuation practices
- Management of hardship loans
- A robust stress-testing framework