Macquarie Bank tightens squeeze on creditors, SMSF borrowers

Macquarie Group will introduce new underwriting standards, credit policies and valuation services on Monday, as it launches changes across its financial services range, from property loans to self managed super funds. The changes, which follow last week's Reserve Bank of Australia warnings about rising interest rates, are being emulated by other lenders as the economy moves into a new phase. Macquarie is also reviewing its upfront property valuation service, which will mean mortgage brokers, who are intermediaries between banks and property buyers, will have to pay a $49 fee for each valuation that does not receive an application within 60 days. Conditions are being toughened on borrowers receiving help from a family member or friend to assist with a property purchase to ensure "all relevant information is used". Recent research shows that up to half of Generation Y property buyers - born between 1980 and 1990 - are relying on some form of gift to get into the property market. Refinancing of interest capitalising loans, or other borrowing facilities where a regular repayment may not be required, will require more information to show the applicant can make regular repayments. Credit card debt will also be more closely scrutinised with the threshold being 36 per cent of debt, or 3 per cent a month, of the total credit card limit. National Australia Bank recently introduced a similar change. Maximum loan-to-value ratio for self managed super fund lending has been reduced to 70 per cent. In addition, the minimum net asset of the fund has been raised to $250,000 and one or two of the members of the fund must already own property in their own right outside the fund. Minimum loans, which includes construction, have been increased to $150,000. A loan applicant's ability to repay is also being tightened. Valuation policies are being amended to allow greater use of contract of sale for valuations where the maximum loan-to-value ratio is 80 per cent. A contract of sale sets out basic terms conditions of the sale including sale price, date of settlement and whether the property will be available as a vacant possession. Westpac, the nation's second largest mortgage lender, recently announced it is ditching mortgage and equity-release products in a high-level review of its product range and underwriting standards. The top-down review is expected to reassess dozens of loans and lending packages, which include credit and insurance products, as the bank and its subsidiaries adjust lending criteria to changing market conditions. National Australia Bank is also introducing tougher credit controls on new loans and reassessing its appetite for risk as household debt blows out to record highs.' Meg Bonighton, NAB general manager for home lending, said she wants to stop borrowers from taking on too much debt and "putting undue pressure on their lifestyles" as the federal government and regulators continue to warn about unsustainable growth in the lending market.