An award-winning mortgage broker has said that it has become more difficult for property investors to obtain mortgage finance in the wake of the royal commission, as spooked lenders have gone tightening their lending policies.
Aussie mortgage broker Ross Le Quesne said that the reaction from the banks has been immediate, which is not surprising.
“We have seen the banks have been really conservative in terms of the reports that are coming out of the royal commission which is linked to the grey area of lending policy,” Mr Le Quesne told REB.
“The banks are very much black and white around their lending policy.”
He said that there is one area in particular where the royal commission has influenced the banks’ credit assessment: living expenses.
“The other area we’ve seen that they have become more strict on is on the living expenses and really wanting to understand the client’s living expenses.
“There are actually more lines; as many as 13 or 14 different categories they are splitting into. For property investors, the one that has been added is the property investor-related costs that has now got its own line as an expense.”
Mr Le Quesne added that this will have a material effect on borrowers, particularly investors.
“The effect that that has on borrowers is that they won’t be able to borrow as much money because they will need to factor in additional expenses because of the serviceability calculators of the lenders.”
All of this, the broker said, comes on top of the APRA changes that came in December 2014.
“And since that time we have seen a lot of lenders changing their serviceability calculator.
“So that combined [with] the tighter enforcement of guidelines and tighter look at living expenses, it means that investment lending is getting harder.”
Mr Le Quesne said that another impact of the RC is that lenders are now starting to conduct comprehensive credit reporting, and he expects to see that play out more frequently over the next 12 months.
“All of these factors have meant that lending is getting more difficult for property investors. What was already tight and tightening up on the APRA guidelines means the lenders are being a lot more conservative.
“The amount of information that we are being asked for has never been so difficult.”
Mr Le Quesne is the principal of Aussie Parramatta in Sydney. His career in finance spans 20 years.
In 2010 and from 2013 to 2016, Aussie Parramatta was Aussie’s top office nationally. Through the years, Mr Le Quesne has won various industry awards.
