Lending Policy continues to tighten

Lending policy continues to tighten with several banks announcing further changes to be introduced.

LOW DOC - this space has changed dramatically over the last twelve months with few lenders still offering a 'true' low doc. Many lenders have reduced LVR's to max 60%. CBA announced this week that not only will they require 12 months BAS statements to support income declared, but now require verification from the ATO that these BAS have been lodged - hardly "low doc" at all.

HIGH LVR - these continue to fall or be restricted. recent changes include BankWest (like many lenders) now require 5% genuinue savings for all loans over 85%LVR.

ASSESSMENT RATES - the rates at which lenders assess your loan, which includes a buffer for future rate increase, has been increasing accross many lenders. ING have a 'floor' rate (minimum) or 8%, whilst AMP & The Rock have increased the 'margin' from 1.5% to 2% above current rates. This simply means you can now borrow less than you could last week, however realistically, as you can now borrow a lot more than say six months ago (due to the fall in rates) some buffer is perhaps a good idea.