Loans for the self-employed dry up
Maximum loan to valuation ratios for low-doc mortgages loans have shrunk from around 80 per cent to about 60 per cent over the past year as mortgage insurers such as Genworth have tightened their underwriting criteria. Genworth insures about 70 per cent of Australian insured mortgages and has announced that tighter restrictions are being placed on lenders and borrowers in anticipation of deteriorating economic conditions next year. No deposit loans have almost disappeared from the market and the maximum loan to valuation ratios now being given to many borrowers are down to about 90 per cent. Commonwealth Bank now requires self employed borrowers to supply one year's worth of business activity statements. Westpac and NAB are monitoring their 100 per cent loan products. Last month ANZ cut its maximum LVR on low-doc mortgage loans from 80 per cent to 60 per cent. St George has restricted access to its no deposit loan.
Source: The Australian Financial Review