NAB tightens its lending criteria for Australians
NAB is getting tougher when it comes to home lending, with borrowers facing increased scrutiny before a loan is offered.
After announcing an increase to interest rates for owner occupiers and investors last week, NAB has now revealed that it is tightening the lending criteria for home loans, according to the AFR. Part of the bank’s interest rate announcement last week included the introduction of a new special offer for first home buyers, but despite this, the bank has gotten tougher on potential borrowers.
When calculating income to check eligibility, NAB has stated that it will not accept government parenting benefits and family tax allowances as the gross income source of the applicant. These sources should only make up no more than 50% of the applicant's total income. According to the AFR, the bank is warning that applications and conditional approvals will become invalid if the information provided is incorrect or changes prior to settlement.
“NAB continues to adjust its home lending policies as part of our ongoing commitment to responsible lending, to ensure that customers can repay their mortgage both today and in the future,” an NAB spokesperson told the AFR.
“As part of this, we now require that government parenting payments and family tax allowances (in total) must not represent the predominant income source of a home loan application. We consider this prudent given that these payments are not ongoing and will discontinue once a child reaches a certain age.”
As a further restriction to its home lending policies, NAB will increase variable rates on loans taken out by overseas borrowers, reported the AFR. The bank has not specified how much this increase will be.