5 Jan 2016
The four major banks are tightening their mortgage lending requirements by enforcing new loan standards that significantly reduce the borrowing capacity of Australian families applying for home loans, according to mortgagee broker homeloanexpets.com.au.
The new lending policies that have started being implemented a few months ago have considerably reduced the amount of money these big banks are prepared to lend to homebuyers. A family with a combined income of $120,000 per year applying for a loan to purchase an investment property can now borrow up to $80,000 less than what the banks were prepared to offer only about twelve months ago. If the same family applies for loan to purchase a home to live in , its borrowing capacity is now reduced to $65,000.
Whilst these changes do not target any specific communities, it can be expected many migrant families within new and emerging communities in general and African families in particular are going to get hit very hard as they generally enjoy less income than the rest of the Australian population.
A typical suburban home on sale
Even those families owning an existing property with a good amount of equity will be affected if they want buy an investment property. The banks are deliberately reducing equity value for existing property by approximately 20% as part of the same policy, to make it harder for people to buy investment properties unless they have a very comfortable level of income.
In the last couple years, there has been an increase in the number of African families buying houses in Melbourne and around the country, but these new loan requirements are more likely to stall progress in home ownership in our communities. The 4 big banks control the mortgage lending market and even though smaller banks are still likely to offer better deals to loan applications, it can be expected that getting a home loan will be much tougher now, no matter which bank you go to.