The banks are becoming 'home loan shy'

Wednesday 21 April 2010

Article by Mozo

Australia’s major banks are looking to "ration" their mortgage money and are instead focusing on business lending, it has been suggested.

Lesley Parker, a columnist for the Sydney Morning Herald, argued that the banks’ have tightened their mortgage lending criteria, with 100 per cent home loans now a thing of the past.

The writer noted that first-home buyers and Aussies who wish to compare home loans and refinance existing arrangements are coming under intense scrutiny from the ‘big four’ banks at a time when surging house prices and interest rates are already causing borrowers problems.

In addition, it was suggested that the banks are choosing to take a step back from the mortgage market after gaining a huge share in recent years.

"Big banks are suffering a bout of indigestion, having bitten off an even larger chunk of the mortgage market as the global financial crisis hammered their non-bank lending rivals and big institutions benefited from the perception they were ‘safe’," said the columnist.

This week, the latest residential land report by the Housing Industry Association (HIA) and rpdata.com revealed that a sharp rise in land prices is threatening the recovery in new home building at a time when there is a severe shortfall in supply.

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