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Rates are low but borrowing is harder |
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Thursday, 02 April 2009 |
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Interest rates may be at historical lows but borrowing is getting tougher and tougher. Commonwealth Bank announced this week that it will reduce its maximum loan to value ratio to 90%. Meanwhile, RAMS & St George have both recently axed their no deposit home loan products.
Commonwealth Bank have followed ANZ and reduced their maximum loan to value ratio, for new business, to 90%. This means that a customer can only borrow 90% of a property’s value (a customer purchasing a $400,000 home would need a $40,000 deposit). They will consider allowing 95% for existing customers of the bank that have an established track record with Commonwealth and are not refinancing other banks debts. Another common policy being implemented by major banks and lenders is the need for evidence of genuine savings. Many are now making it mandatory that a customer provide evidence that at least 3 - 5% of their deposit was saved over a minimum three month period. RAMS & St George have both just recently stopped offering their no deposit home loan products. RAMS announced on March 27 that it would no longer offer it’s no deposit product to maintain a long term risk based approach to lending to ensure RAMS remains viable into the future. St George said that it wouldn’t be responsible to keep offering it in light of current market conditions. Other major lenders Bankwest, Citibank and ING have also tightened up their credit criteria in an effort to reduce risk in their mortgage portfolios. |
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