Westpac Group, the nation's second largest mortgage provider, will next Monday announce new borrowing terms and conditions for local and foreign residential property buyers on partner visas.
The changes will tighten assessment of residential values and borrowers' ability to repay but ease applications for some applicants' with visas and borrowers relying on income from a second job to qualify for a loan.
Westpac Group, which includes Bank of Melbourne, BankSA and St George Bank, has about 23 per cent of the nation's mortgages, the biggest share of interest-only loans, at about 46 per cent, and the second largest percentage of investor loans, about 40 per cent.
National Australia Bank has the largest share of investors with about 42 per cent.
The group is relaxing lending to holders of 309 and 820 partner visas, which allow the partner or spouse of an Australian citizen, Australian permanent resident or eligible New Zealand citizen to live in Australia.
The bank and subsidiaries ceased lending all foreign residential property buyers in 2016, which means it does not accept applications from non-residents, homes with foreign self-employed income and those who hold temporary visas in Australia.
Under the latest measure, 309 and 820 visas will be accepted in loan applications to a maximum loan to value ratio of 90 per cent, an increase from 80 per cent.
Terms for low deposit borrowers with second jobs will be liberalised.
A second job has to have been held for one year – rather than two – with the same employer for income to acceptable.
Desktop valuations, which are based on computerised or photographic evidence rather than a formal valuation, will only be used for a maximum loan to value ratio of 90 per cent.
The household expenditure measure, which is used to assess borrowers' capacity to repay, is also being updated.
Major lenders are offering lucrative deals for property buyers and refinancing with about 20 per cent deposit, sound credit record and regular income.
But they are tightening terms and conditions for interest only investors and requiring more evidence of home buyers' capacity to repay throughout the term of the loan.
For example, Westpac Group last year announced it will put brokers and their clients under much closer scrutiny with tougher new responsible lending rules and declarations.
It has also launched a 3.59 per cent variable rate for owner-occupied loans with principal and interest payments, its lowest since 1956, and is offering a $1500 cashback for selected refinances.
The group is estimated to have a $250 million 'war chest' to fund deep discounts and attractor rates. NAB has about $180 million, CBA $207 million and ANZ $129 million, according to analysis.
SOURCE: www.afr.com