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Thread: How the financial crisis is hitting mortgages

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    Default How the financial crisis is hitting mortgages

    How the financial crisis is hitting mortgages
    Page 1 of 2 ...... 4:00AM Saturday Oct 04, 2008
    By Eloise Gibson

    The credit crisis that started half a world away is hitting renovators and first-home buyers.

    A combination of falling house prices, rising living costs and higher prices for overseas money is forcing banks to tighten their lending policies.

    Worst affected will be those borrowing a high proportion of their home's value. But all borrowers now face tougher tests to prove they can pay back a loan.

    ASB drastically tightened its lending rules this week, telling brokers that it would generally not lend more than 80 per cent of a home's value.

    Its head of retail banking, Ian Park, said ASB would consider applications for more than 80 per cent, "but they will have to be very strong from a servicing perspective".

    A year ago, all main banks would lend up to 100 per cent of a home's value.

    When house prices were rising and the economy was strong, up to 40 per cent of first-home buyers were getting 100 per cent loans, brokers say.

    Massey University banking expert David Tripe said consumer credit had been tightened as banks took a less rosy view of borrowers' prospects.

    More here.

    And some more about it.
    Mother Bear

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    shabbichik is offline Junior Member
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