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More lenders toughen housing lending criteria

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A growing number of lenders is discreetly toughening up borrowing conditions amid concerns regarding supply glut, falling demand, and the capacity of off-the-plan buyers to complete purchases. Others are imposing tougher lending conditions on borrowers seeking multiple properties on separate titles located within the same block.

Credit Union Australia has announced that it will no longer lend money for apartments measuring less than 40 square metres and for buildings with more than 50 units. 

It has also reviewed its definition of units, such that an existing high-density unit is now defined as a property at least 12 months old. Existing units valued less than $1 million will now have a tougher loan-to-value of 80 and 75 per cent for investors and owner-occupiers, while the LVR of new units has been decreased to 70 and 75 per cent. Those worth more than $1 million will be individually reviewed.

Firstmac has also tightened apartment lending in developments with more than six floors. Australian First Mortgage also limited lending for outer-suburban estates. AMP, the nation’s  largest diversified financial services group, also tightened the lending and borrowing criteria for about 25 cities and outer suburbs, including Singleton, Morwell, and Altona.

Non-bank lenders are not the only ones joining the crackdown on borrowing conditions. Earlier this month, Citi and ING Direct announced tougher terms and conditions for both investors and owner-occupiers.

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