Tide about to turn on low equity loans

Banks low equity loan volumes are nowhere near the maximum allowed by the Reserve Bank’s speed bump restrictions.Tide

Friday, February 28th 2014, 9:18AM 1 Comment

The latest figures from the central bank show just 4.8% of the $3.09 billion lent in January was to people with deposit of less than 20%.

That figure fell to 3.8% after exemptions, such as Welcome Home Loans and construction finance, were taken out.

Under the speed bump restrictions introduced in October registered banks could only lend 10% of their mortgages to customers who had equity of less than 20% in a deal.

Before the restrictions were introduced 25.1% of lending was to low deposit home buyers in September. The January figure is down from 5.6% in December.

However this situation is likely to change. ANZ has told brokers that it has worked through most of the pre-approvals it had on its books when the restrictions started and is now looking to do more in the low-equity space.

It said that in the next month or so it will become far more active in this market and borrowers who have a strong ability to service a loan will be welcomed. It’s approach won’t be to just existing ANZ customers.

Likwise Westpac has indicated it will be more aggressive in this market too.


« Brokers have role as banks turn off tapBorrowers still exposed to rates rises »

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Comments from our readers

On 28 February 2014 at 10:29 am mike hardy said:
I wouldn't go near either of the above mentioned banks for a low equity loan, Westpac made lots of empty promises to us a year before all these speed-bump restrictions were on the horizon then messed us around to the point we thought they were going to damage our credit rating, Anz we had a decent pre-approval with when these restrictions hit, they then trebled their low equity fee's under the radar and if I had not spotted the fact on their website (in the very small print) and pulled out of a multi-offer there and then we could have been in serious trouble.
In my personal opinion, there are better banks/places to go to for a low equity loan, my advice to all would be to shop around and read all the fine print/work out what it's going to cost you in fee's first.
Best of luck to all out there struggling for a homeloan

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