PRESS RELEASE: COVID-19 Forces Borrowers to Seek Specialist Lenders

Borrowers unable to secure credit due to stricter lending criteria being applied by traditional lenders since the outbreak of the coronavirus COVID-19 pandemic are turning to specialist lenders for assistance.

Sydney-based mortgage brokerage NonConformingLoans.com.au said it has received a substantial increase in inquiry from rejected loan applicants due to the economic impact of the COVID-19 crisis.

“Many borrowers are unable to obtain credit from traditional lenders due to the tightening of lending criteria in response to economic uncertainty caused by the coronavirus pandemic,” said Non Conforming Loans Managing Director Ray Ethell.

“These applicants who have been declined for a loan or by lenders mortgage insurance due to policy change or their credit score have been turning to specialist lenders like Non Conforming Loans for a solution.”

Mr Ethell said several lenders and mortgage insurers have placed an embargo on borrowers working in industries particularly hard hit by the COVID-19 impact, including the retail, aviation, hospitality, real estate and entertainment sectors.

“Applicants are not being assessed based on their individual circumstances,” he said.

“Some lenders have announced they will reduce acceptable income from commissions, overtime and bonuses to only 50 per cent of income. This is happening in some cases where there has been no change to the applicant’s take-home pay. Income from dividends is also no longer to be accepted for serviceability assessments by some lenders.

“Casual and contractor applicants have also been dealt a heavy hand by some lenders as they are not able to use their income for servicing unless it as a secondary income with a salaried employee.
“Rental income has been reduced to only 60% of rental paid and the self-employed have had maximum loan to value ratio (LVR) reduced to below 80% and a reduction of 30% of income for servicing for other lenders.”

Mr Ethell said borrowers declined by traditional lenders need not despair as they may have other options.

“It is important to speak with a specialist lender or an experienced mortgage broker that is up with all the policy changes and can guide you through the lending landscape to find a financial solution,” Mr Ethell said.