Last week ANZ announced they are reducing the maximum lending to 90% of the value of the security property, ie 90% LVR.
Today Firstmac have also announced 90% is the maximum LVR they can now accept. This is no doubt due to the mortgage insurers.
Haven't heard anything from other lenders at this stage.
There will probably be further restrictions on the way.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
What will happen in the future when you need to refinance and you are currently on LO Doc product is there a problem with getting finance??
Yes, there are problems and it is getting harder to refinance from a Low Doc to another Low Doc. If you are going to full doc, there should be little problem assuming your income is ok.
St George have advised, as of today, they are still happy to refinance low docs from other lenders into their low docs, as long as ABN and other requirements are met. St George have their own LMI which helps.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
wont last long… we all know that institutional investors/ securitisation markets wont buy lo docs, so eventually every lender has to face the reality of pulling them. It will be a 60% lo doc market by Xmas or early 2009. PMI and Genworth will see to that… unless the deal is impeccable. But if it was im peccable I guess it would be fulldoc!!!
Anyone still writing lo doc will have to insure internally, like Terry says, but St George and Westpac cant keep sticking it on balance sheet. In an environment where the banks are starting to set aside massive amounts for bad debts/provisioning, I dont see how they will make a business case for offering lo doc above 60 much longer. Wouldnt be surprised if they reduce Full Doc to 90 either, but thats a whole other thread. If by some miracle lo doc survives at 80%, we can probably expect pricing to be at least 20-30 bpts above SVR. Maybe more. It is the only way investors "may" consider them so lenders can sell them… of course in time all of this will pass…. but for now, lo doc is almost dead above 60%.
I have to say this though, a few BDM's from lenders like Fmac and other securitised lenders warned me to go to my lo doc customers and get em topped up, refi'd, whatever, months ago. They told me over and over to do it… gave me several months warning that lo doc was going to be pulled. Warned me that the insurers were going to make refi's almost impossible. They told me to get in, get what you can and park it in a LOC or Offset for a rainy day, etc… warned me over and over and over, but I didnt do a thing about it. Once again I listened to the banks RM's/BDM's telling me they werent changing any policies…instead of the non banks, who in my experience have been way ahead of the knowledge curve versus the bank BDM's during the credit crunch. Anyway, wish I'd listened. Cant help many of my lo doc book now, unless they go PAYG!
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