One in four homeowners given mortgages last year would be rejected if they applied for the same loan this year, brokers warn. Picture: Penny Stephens
One in four homeowners given mortgages last year would be rejected if they applied for the same loan this year, brokers warn. Picture: Penny Stephens

One in four homeowners would fail new mortgage tests

A SHOCK new broker survey has revealed one in four homeowners given home loans last year would fail new bank tests if they applied today.

Everything from Netflix habits, to your online spending spree, and even how many times you chose to use the tollway rather than take the long way around are going under credit microscope.

"Banks are reviewing an applicant's actual expenses, rather than using the traditional household expenditure measure method" this year according to the latest HashChing broker survey.

A massive 41 per cent of brokers believed a quarter of those who secured mortgages last year would not pass tougher rules around living expenses now.

All your actual spending habits from Netflix to online shopping now go under the microscope.
All your actual spending habits from Netflix to online shopping now go under the microscope.

 

"The reality is, it has become a lot harder to secure a new home loan or refinance an existing one. Banks are scrutinising everything, whether it's how much borrowers are spending on tolls, Netflix, or ASOS," said Siobhan Hayden, HashChing's chief operating officer.

"This is because lenders are tightening their credit policies and shining an unprecedentedly harsh spotlight on applicants' living expenses.

"Reviewing a loan applicant's living expenses is a rational metric to assess suitability for the loan, and doing so should provide more protections for both banks and borrowers.

However, combing through living expenses is having an adverse effect on existing homeowners who would not qualify for their current mortgage today. This leaves them unable to refinance and stuck with their existing rate.

She suggested borrowers and househunters seek financial advice now to understand the recent changes to lending.

The Reserve Bank board meets Tuesday for its monthly monetary policy meeting, with 100 per cent of brokers expecting the cash rate target to remain on hold at 1.5 per cent.

Four in five brokers believe the official interest rate will "remain unchanged into 2019".



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