From Domainfax:
From this Saturday, the bank will decline any customer applying for an interest-only loan who has a high loan-to-income ratio – an approach that banking sources said was not used by other lenders in the mortgage market…
NAB’s general manager of home lending, Meg Bonighton, said the move was a response to the bank’s regulatory obligations and to make sure customers could afford the loans they were taking out.
“We’re conscious of concerns raised by regulatory bodies about Australia’s household debt-to-income ratio, which has risen significantly over the past decade,” she said…
While NAB already calculates loan-to-income ratios when assessing loans, it has not previously used the metric to determine whether a customer gets a loan, and such a blanket approach is understood to be unusual in the industry.
Managing director of mortgage Homeloanexperts.com.au, Otto Dargan, said the changes appeared aimed at ensuring only customers with stronger prospects of repaying their loans would be able to get interest-only mortgages.
Are NAB seriously admitting that it had not previously considered whether customers could afford the loans they were taking out?
If so, that should raise a big red flag.
