Attn Westpac and St G (and CBA, sort of) Clients!

Hi All,

As of July 1, Westpac and St G will no longer be extending IO via form/phone call as they have previously.

I fully expect CBA to follow suit shortly - the clock has been ticking on this policy for a while and I'm pretty sure they won't be holding out much longer.

So - unless you're happy to roll over to P&I when your IO term runs out, or your borrowing is well below your limits with a 'normal' lender (think someone that assesses all debt at 7.25%) please give your lender a ring ASAP to extend out your IO term before you lose your chance.

If you're a CBA client, hit up one of the brokers here for a form, they're easy to do via email so you never have to leave your desk.

 

Thank you @Jess Peletier and makes me think it's going to really tough for mortgage brokers to be on top of all the changes and to attract new clients/ continued business.

 

I would say more tough for consumers than brokers. Of all things they're just reducing the work that we can do in terms of back end/maintenance, but increasing the value of having someone with a toolbox full of dozens of lender options and policy sets.

This is where a good client focused broker can shine. Speaking with colleagues in the office/other firms isn't so much being distressed about the industry itself - but annoyance of seeing our clients receiving less value from lenders as the regulatory environment turns the screws on what it sees as undesirable client types. (hello investors)

 

Thanks Jess.

Re: CBA, my broker has said that CBA won't extend IO until you are close to the endpoint (about 45 days if I remember correctly?). So this is only of use for CBA members who are close to running out of IO?

 

Rang WBC just now , they wont extend my IO loan due to rocket repayment home loan ( max 5 years only ) is this true ? IO ends July 2019

 

Boom...boom....wow!

Does that mean that they will do a full assessment prior to renewing the I/O period going forward...

 

Some brokers, for sure. Word on the street is that some are starting to throw their hands in the air and leave the industry. It is a bit tricky keeping on top of the changes - we're just fully researching every deal and taking nothing for granted. It'll settle into a new norm, and those that are flexible will flourish - like any industry in any time of change.

This goes for investors too - the changing credit environment also means a whole new world strategy wise, so those working with people banking on equity releases and lots of growth to leverage into $xM worth of property are going to come unstuck pretty quickly.

As Nathan Birth is finding out, equity without borrowing capacity needs to be realised to be useful.

 

Yes it does. It may be a 'lite' assessment (whatever that means to the bank possibly not full verification?), but payslips and A&L will be required.

 

I wouldn't have thought so.

@mcarthur I've been extending my clients out and haven't had any come back with that response. They've been all varying terms. I've also been doing some product swaps, so maybe fix for a year at the same time and see if it will fly.

 

Even easier, no form.
Log into netbanking > view accounts > account information > select home loan > switch my home loan
(can't always be done pending account structure, company/trust, multiple, method of operation)

Account information is a great 'tab' that not many look at, shows you a alot
- Contracted loan term
- Remaining loan term based on current required repayment
- Interest rate
- Repayment type (P&I or IO)
- Interest rate type (Fixed or Variable) > allows you to switch
- Required monthly repayment > allow you to change amount, not account yet
- Interest charged, this financial year and last
- Interest saved, nice to know what the offset has done
- Offset arrangement

 

Any word on when the time's up for CBA Brady?

 

I have an ANZ one that is due to expire in Nov.
Any word on ANZs processes for extending Interest Only?

 

It's transitioning already.

I can't tick and flick anymore, it goes through a request. (which is what brokers were doing already, direct was even more so tick and flick)
Before it was a 30second job and was sorted and changed instantly.
Now form gets submitted and request sent and usually actioned by mortgage services team without further request.
I haven't had any come back with a no yet or ask for more info.
But note can't switch a funded loan P&I <3months old to IO, get a pretty good slap on the wrist for that these days.

Be interesting if it does get to the stage of full assessment required, likely will depend on the IO percentages and if APRA decide to make it full assessment.

 

That is going to cause people massive grief.......particularly if they can't service any more.......

 

Full assessment

 

I'm pretty sure they won't do it - their max IO term is 5 years now. That said I haven't had to try recently with ANZ. Others may have more recent experience.

 

Glad I flipped my P&I over to IO with a phone call and no assessment a couple of months back. Who knows, maybe the lending landscape in 5 years would've changed so much that current IO tightening... loosens? Any chance of that?

 

What chance do you see of the government regulator saying to banks in the near future "please stop bothering to assess whether people can afford their loans when making significant changes to them".

That should give you the answer.

 

Does this affect rams too?

 

Good point.
Maybe... maybe in some crazy future when bank shareholders complain their profits are slipping because investors are fleeing higher IRs and going to cheaper online-only lenders who are happy to take a bigger slice of the market from investors who don't necessarily need a polished branch, fancy app or ATM access; the volume of new homeowner loans being written is behind business targets and loosening the noose on IOs seems like a quick win to milk loan holders like moi for a few extra years or a decade if they voluntarily sign up to it. Can always take their IP (or whole portfolio if cross-linked) if they somehow can't pay off the untouched principle. It'll be stretch scenario but might happen..