Westpac has just rolled out new lending policies that target Gen-X homebuyers.

Buyers will be quizzed about how they plan to repay the outstanding balance on their mortgages or any credit secured against their properties once they retire — even if they have decades left in the workforce.

Bank officials and mortgage brokers, who act as intermediaries between homebuyers and the bank, have reportedly been instructed to record applicants’ comments in their notes for review.

“These conversations help to ensure your clients have considered any loan commitments they may have in retirement, and they are comfortable with the products they will hold with us when they reach retirement,” internal bank documents said. 

Evidence of retirement strategies, such as superannuation balances, use of investments, and future rental income, will not be required.

Westpac’s latest application requirements, which are also likely to apply to its subsidiaries, are angering mortgage brokers who fear that banks are transferring long-term responsibility for scrutinising applications to them. Some mortgage brokers have also questioned the logic behind asking borrowers what their financial plans would be one or two decades down the road.

But the rising cost of funding wholesale debt, growing regulatory costs, and borrowers seeking bigger loans for longer terms are causing lenders to safeguard their incomes by toughening lending terms and increasing rates.

The new rules will apply from Feb. 20 onwards and target borrowers aged 55 or older, or those who will be 75 before the loan terms expire.