11/12/2019
Refinancing: How to get approval in a tougher credit environment.
Over the past 12 months, the finance industry has been through significant upheaval.
The banking royal commission, stricter responsible lending guidelines from ASIC and the introduction of Comprehensive Credit Reporting (CCR) has created a much tougher credit environment.
There is still a lot of education needed on the impact and use of CCR, on both sides of the homeowner/lender divide.
But understanding the new rules and regimes that are beginning to govern the mortgage lending industry now will help all parties take better advantage of the system as it matures into the future.
What is the Comprehensive Credit Reporting (CCR)
Now the consumer and the broker who are looking to refinance are now finding themselves in a stricter credit environment which has thrown up unexpected new barriers and, in many cases, made securing home financing more challenging.
Now lenders are getting a full view of the consumer habits we even had a report from ASIC this week requesting that the Broker ask more information not only on loan statement history but now we need to even look if you utility bills are paid on time.
While there’s no denying that CCR has made it easier for lenders to get a full view of consumers’ spending habits, the impact on home lending hasn’t been quite so bad. We just need to be aware of our spending habits.
However, the introduction of CCR and stricter lending policies do mean consumers need to take a more active interest in their financial behaviours and credit history.
In light of increased scrutiny, it’s more important than ever that first home buyers and refinancers alike understand how their spending behaviour could be viewed by banks and lenders, and shift their habits accordingly.
This has caused the lender assessment times with most banks is around 14 to 21 days and this is causing difficulties with the lender and the brokers trying to process loan.
Our last lot of issues is that the lender are changing the policies daily, this last few weeks at least 6 lenders have announced they have changed policy that they are not accepting pre-approvals due to the lender volumes.
This has caused a lot more work for the broker prior to sending your loan application to the lender. Increasing the time you are waiting to get your approval.
I have had a couple of my client who were in the que to wait 3 weeks for his pre-approval only to find after weeks of preparation the bank has sent an apology that they can’t process the loan due to a policy change.
So then we need to research over 30 lender to see who has adopted this policy, which they don't advertise to the Broker and so that is also causing more issues to get through the processing.
So the answer is to be prepared and expect more and more questions and be patient and don’t please help the broker by sending as much as you can before the loan going to the bank.
The bank is not looking at the assessment until everything has been uploaded so they are requesting the extra documents to be able to get the loan ready before they send it to the que and then sit for up to 14 days to get to pre-assessment before it is sent up to the assessor for recommendation for approval.
Expect Delays with every lender so be prepared and patient we will all get used to the new rules and this will get easier.
OH for the good old days when we could send everything to the lender and get conditional in 24 hours so we just need to manage our expectations.
I hope this is helpful thanks Carmel Schmidt
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