WBC increases rental used in Servicing

Discussion in 'Loans & Mortgage Brokers' started by Rolf Latham, 13th May, 2022.

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  1. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Who would have thought .........................

    ta
    rolf


    From Sunday 22 May 2022 (unless specifically noted otherwise), you’ll find these changes will apply for new and existing customers to applications for new loans (including applications for an increase to an existing loan or any servicing/variation activity requiring a serviceability assessment).
    Rental Income Shading changes.


    Great news first! To further help customers who are looking for their next investment property, we're reducing our rental shading to:

    • 10% for a standard investment property currently tenanted (non-LMI).
    • 30% for a prestige property (non-LMI and LMI).
     
    Pandabites, craigc, AndyPandy and 5 others like this.
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Makes sense. The shading is intended to cover vacancy periods and the fact that it can be variable income (even though the pandemic is the first time it's gone down in my experience).

    They'll still ask what the holding costs are and add that as a liability.
     
  3. Lacrim

    Lacrim Well-Known Member

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    What's the current shading?
     
  4. Brady

    Brady Well-Known Member

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    Great move - absolute crazy that there is a 20% haircut plus actual expenses.
    Especially when it's a result of tax returns provided/required.
    Let's go with actual rent/expenses over 2 years.
    There are enough assessment buffers already in place.
     
  5. Marty McDonald

    Marty McDonald Mortgage broker Business Member

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    They already ask the holding costs
     
  6. Marty McDonald

    Marty McDonald Mortgage broker Business Member

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    Policy change imo because they know rents are going up nation wide and vacancy rates also very low so they can relax their shading without any material impact to credit quality.
     
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  7. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    The new policy change for Refi with ANZ also a game changer.
     
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  8. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Obviously STG BOM and Bank SA came out with the same policy anouncement this arvo as part of the WBC group, Id assume applies for RAMS as well

    ta
    rolf
     
  9. Scott No Mates

    Scott No Mates Well-Known Member

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    A nice shade of grey.
     
  10. Morgs

    Morgs Well-Known Member Business Member

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    This is a timely reminder and case in point... given the period ahead there will be a contraction in borrowing capacity due to higher rates and HEMs that on the other side of the coin there are policies which can be deployed that can help balance things out...
     
  11. serendip

    serendip Well-Known Member

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    Can I ask what the definition of a prestige property is? For eg an area I'm considering buying median rent is $850pw for a 2br apartment but obviously this would be high rent for other areas.....
     
  12. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    depends on city

    Sydney > 5 mill, other capitals 3.5 mill

    ta
    rolf
     
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  13. serendip

    serendip Well-Known Member

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    Perfect, thanks
     
  14. Jamesaurus

    Jamesaurus Well-Known Member

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    How did their policy change?
     
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  15. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Refinance without the need to show servicing .

    As long as your current repayment is the same or more then new proposed repayment.

    Subject to a few other conditions, such as only apply to PAYG and good conduct on loan and credit history.
     
    Pandabites likes this.
  16. Lacrim

    Lacrim Well-Known Member

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    Wait a sec...so you saying I can, for example, refi a $500K loan with CBA to ANZ without serviceability checks and providing financials, as long as I'm not increasing the $500K??
     
  17. MJS1034

    MJS1034 Well-Known Member

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    Correct
     
  18. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    extending loan term could also allow for lower repayments to improve serviceability too - also can increase retirementability
     
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  19. Perky29

    Perky29 Well-Known Member

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    Interesting - what is ANZ's best interest rate on a variable loan product that allows an offset?
    I am getting 2.84% with Westpac currently on one of our loans.
     
  20. Lacrim

    Lacrim Well-Known Member

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    Holy crap, I'm gonna act on this.