One in three mortgage enquiries not meeting bank criteria

One in three mortgage enquiries will not fit the current lending criteria set by banks, according to Loan Market Group.

The firm's chief operating officer Dean Rushton said tighter lending rules which require genuine savings contributions of around 5% towards the property purchase was creating major hurdles for new home buyers. He said other loan applicants who passed all the lending criteria were being rejected because they had few assets.

"The major lenders are in a competitive position where they can pick and chose who they want to lend money to and there is little room to move for applicants who do not fit the box," said Rushton. "We are finding that 30 per cent of first time buyers who enquire about housing finance won't even get past first base."

Rushton said first home buyers had been able to use the boosted First Home Owners Grant as a contributor to their deposit, but this had become more difficult since the concession was partly reduced on September 30.

Banks earlier this year reduced their maximum loan to valuation ratio's (LVR's) to as low as 90% in response to the global financial crisis. However, Mr Rushton said family equity options were still available to help first home buyers and families entering the residential real estate market.

If you are having difficulty getting a home loan because you don't fit into the bank's strict lending criteria, speak to the mortgage brokers at Intellichoice and find out how we can help you with our range of alternative financial products, such as a non-corforming home loan.