There has been a massive change in home loans in some of Australia’s dead zones.
According to the Digital Finance Analytics or DFA, location is a major factor for banks to allow home loans or mortgages. Some of these lenders are even blacklisting certain areas that are risky for the lending market.
The crackdown happened when Commissioner Kenneth Hayne assessed Australian banks. This isn’t something new because back in 2015, banks are already stricter when it comes to lending standards. Aside from the cost of living, financial institutions are also looking at the credit rating of borrowers, assessing whether they can pay back the money on time.
Meanwhile, what makes this news even worst is that crackdown also limits existing loans to be refinanced. For example, if one borrower already has an existing and wanted to refinance, assessments will also be performed.
Given these strict measures, many Australians are on the verge of losing their homes when the interest starts to pile up. These borrowers have no choice but to continue what they have started instead of refinancing existing loans and eventually being turned down by the lender.
In an article published by the Daily Mail UK, it is stated that the Banking Royal Commission has been very strict when it comes to loans. Momentum Wealth team leader of Finance Caylum Merrick backed this up by citing that for some time, it has been difficult to get credit from Australian banks.
“It’s a bit of a perfect storm…with the Banking Royal Commission, that’s provided with a whole other raft of challenges for borrowers regarding serviceability,” said Merrick.
Australians Lack Savings Buffer
There are finance experts that claims Australians lack ‘savings buffer’ to afford living expenses. Many blamed the lack of financial management and living beyond means just to sustain the lifestyle.
However, this isn’t just an issue about what the people can afford but rather, the accessibility of funds that can help them improve their quality of life.