Westpac cracks down on self-employed borrowers
The major bank has announced a number of changes to its home lending policy, including a reduction to the maximum LVR for self-employed applicants.
Westpac Group – which includes Bank of Melbourne, BankSA and St.George Bank – has revised its residential lending policy as part of its ongoing response to heightened credit quality risks associated with the COVID-19 crisis.
The revisions include a temporary reduction to the maximum loan-to-value ratio (LVR) for self-employed applicants, and income shading changes, effective 17 May.
For self-employed applicants, Westpac has revealed that it will be lowering the maximum LVR to 80 per cent, with the exception of loans assessed under the Medico Sector Policy, where a maximum LVR of 85 per cent will apply.
The new maximum LVR will apply to both new owner-occupied and investment home loan applications with self-employed income.
These changes are the latest among several credit policy revisions from Westpac over the past month, which included the withdrawal of lender’s mortgage insurance waivers for the industry specialisation sector and the sports and entertainment industries.
Such changes have come in anticipation of a spike in loan defaults off the back of the COVID-19 crisis.