There has been a major tightening of home lending criteria since late 2014 resulting in more loan applications being rejected and smaller maximum loan sizes being offered.
The change has coincided with Australia’s bank regulator APRA introducing a crackdown on home lending criteria at that time, according to an ABC news report.
A fresh survey into the treatment of four hypothetical borrowers shows that the average maximum amount that an owner-occupier could borrow fell by 6 per cent.
With APRA particularly concerned about the previously rapid growth in investor home loans, and introducing a speed limit on growth in that area, the maximum average loan to investors dropped 12 per cent.
APRA’s survey of 20 large banks, building societies and credit unions, conducted in September 2015, shows that just over half tightened their income testing for investor loans, with only one loosening its criteria.
The latest survey also shows that the majority of banks have raised their assumptions of how much households spend on living costs, thus reducing the amount of income left to service a loan.