With the responsible lending guidelines now in place, lenders are looking for the borrower to provide far more evidence and information around their income, future plans and expenditure.
Back in 2006 Low Doc loans accounted for 10 per cent of all mortgages written. In the March 2008 quarter, 11.5 per cent were low doc loans. Fast forward to the present and low doc loans are at historically low levels, meaning it’s harder for borrowers to gain access to finances.
For many prospective first-time buyers, investors and homeowners looking to refinance, the new requirements mean the application process has the ability to become more complicated and the questions more encompassing. The positives will be that the borrower will be provided the right product the first time around and changes implemented to the lending landscape have been designed to assist you in getting to know your clients.
Despite this, the market is still chugging along with lending figures steadily increasing. Recently released data from APRA showed that at the end of the March quarter 2014, the value of residential loans to households across Australia was $1.2 trillion – up from $1.17 trillion at the end of 2013.
However with the process being more complex, consumers will no doubt be looking for advice to make well informed decisions and for professionals who can assist them in looking at the long term big picture. No doubt many will turn to their trusted adviser for guidance. And if you think I’m simply speculating, the third party mortgage channel reached a record market share of 50 per cent during the March quarter 2014.
All of this data suggests that we may be seeing the return of traditional lending, but are you prepared for such change?
Tanya Sale is the chief executive of outsource financial. outsource financial work in partnership with legal firms, financial planners, accountants, licensed conveyance’s and other professional service groups who want to offer their clients a simple and cost-effective range of lending, leasing and asset finance.
