Mortgage stress overlooked by lenders

Australian lenders are fighting to retain or boost their market share, despite evidence of mortgage stress. The major banks are predicting a rebound in mortgage lending this year as fears of further interest rate rises fade. However, there is increasing debate surrounding low-doc loans. Brian Johnson, JPMorgan analyst, said that banks are obsessed with market share, underwriting standards are falling and there has been a massive increase in loan-to-valuation ratios (LVRs). Alistair Jeffery, Bluestone Mortgages CEO, said that the deteriorating residential market, instead of tightening LVRs, will only intensify competition for business. While Jon Donovan of Gadens, said that the industry was concerned by legal issues surrounding asset-lending, where the lender relies on the value of the security, such as a house, rather than the borrower's ability to pay.

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