PHOTO: SUPPLIED Bruce Patten says banks’ requirements are changing quickly.
Mortgage advisers say banks are making it tough to get loans approved – and it’s leaving frustrated buyers on the sidelines.
Reserve Bank data shows there was $2.7 billion in new residential mortgage lending in April, compared to $5.5b a year earlier.
While the rate of loans issued in April will be reduced by the lockdown stalling settlements, brokers said a shift to level 2, then 1, had not meant a return to business as usual.
Glen McLeod, of Edge Mortgages, said banks were still assessing new applications against test servicing rates of 6 per cent or 7 per cent
This is the rate used to determine whether a borrower could afford repayments if interest rates were to increase. But it has not moved much as interest rates plummeted.
“The servicing rate is about three times the special rates the banks are offering. That’s definitely a frustration.”
Another adviser, Karen Tatterson of Loan Market, said those servicing rates being significantly higher than retail interest rates meant it was difficult to get lending.
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