Rate Hikes Hinder Borrowers As Banks Impose Hurdles

Mortgage applications rejected placing consumers' good credit ratings at risk

Thursday May 20, 2010

Higher mortgage repayments are not the only casualty in the Reserve Bank’s quest to bring interest rates back to the more “normal” levels experienced prior to the Global Financial Crisis.

Its latest move on May 4, raising the official cash rate 0.25 per cent to 4.5 per cent, will make it harder for ordinary Australians to get a home loan as banks and lenders continue to tighten lending criteria.

Aussie’s CEO Stephen Porges said the scarcity of money available to lend to borrowers, which is sourced from global credit markets and is now priced considerably higher than it was a few years ago, means banks are being selective as to who they lend money to.

“The banks don’t have as much money to lend as the global credit markets haven’t opened up as much as they would like, so they can afford to be selective when taking on new home loan customers.

“In effect, they’re cherry-picking potential customers with the best capacity to repay debt and are imposing hurdles on the others,” he said.

Mr Porges said unfortunately, the majority of borrowers are unaware of these hurdles – which vary from bank to bank, and as a result their applications are rejected through no real fault of their own.

“Being rejected for a loan could adversely affect their credit rating, and in turn this could also affect them the next time they go to a financial institution to borrow money.”

Mr Porges said using a mortgage broker for their home loan needs could be the solution as they deal with most of the banks and are well versed in the necessary requirements when lodging a loan application.

“Our brokers deal with the banks constantly and are fully aware of what each of them require in regards to a home loan,” he said. “Using a broker to navigate any of the potential hurdles could be the difference between getting approval, and in turn, their dream home or conversely, rejected and having a black mark on their credit rating.”

As one of the country’s largest non-bank providers of financial services, Aussie has a loan book of more than $36 billion. With the acquisition of Wizard, there are now over 150 retail storefronts and more than 850 brokers across the country ready to help customers get a better deal on their finances.

An Aussie broker will offer guidance, assess eligibility, lodge the application and then support the first home buyer borrower through the home loan process. Aussie brokers are available 24 hours a day, seven days a week, in all capital cities and regional centres at the request of customers who call Aussie on 13 13 33.

For more information or to request an interview with Stephen Porges, please call:

Brooke Stoddart
Senior Manager - Public Relations
Aussie
02 8297 0381

Tim Allerton
City PR
(02) 9267 4511

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