Second-tier lender turns screws on loan application process

by Miklos Bolza15 Feb 2017
Macquarie Bank is about to bring in strict new credit rules forcing borrowers to disclose their household and discretionary spending in 12 different categories.
Fairfax Media reports that from today, borrowers will have to provide a detailed list of household expenditure including clothing, personal care, groceries, transport, utilities and other household rates.
Information about other expenses such as childcare, education, insurance, medical costs, investment property outlays, recreation and entertainment, telephone, internet and media streaming subscriptions will also be collected.
Applicants for interest-only loans will also have to supply a reason for the application and explain why they have opted for an interest-only loan as opposed to a principal and interest loan.
In processing these applications, brokers will also have to explain to borrowers how interest-only repayments work and what their impact is on principal and repayments once the interest-only term is finished.
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  • by Com 15/02/2017 9:30:41 AM

    I am so glad that a lender is stepping up to the plate, it is difficult that as a mortgage broker you are expected to detail a customers living expenses and yet lenders do not seem to have the same requirements. It is all to do with the preliminary assessment and the fact that lenders pass the obligation onto the broker to complete these detailed assessments, which i understand but it is still frustrating.

  • by Simon 16/02/2017 10:09:09 AM

    Hi Com,

    I agree to a point, however no doubt we will now see 20 different interpretations of what quantifies as a living expense, what is discretionary, etc. All of which will be passed onto the broker to verify.

    If it stops branch staff (and some rogue brokers no doubt!) under-declaring or in some cases not even reviewing living expenses then it can only be to the improvement of the overall industry, and protection for individual borrowers.

    I'm proud that our organisation is generally two years "in front" of the MFAA and lending institutions in our compliance and customer review obligations. I can sleep at night, knowing all of my clients have been well informed and made realistic judgements of their financial capabilities.