Big banks are tightening lending standards in the face of higher rates and falling property values, with ANZ and NAB cutting their debt-to-income limits.
Online mortgage broker Joust reported that ANZ has lowered its DTI limit from nine times to 7.5 times.
ANZ’s move follows similar changes by NAB. Banking Day reported on May 26 that NAB lowered its DTI limit from nine times to eight times for self-employed applicants.
Commonwealth Bank and Westpac have more conservative settings. Westpac will manually assess an application if the DTI ratio is seven times or more, while CBA will impose tighter parameters if the DTI ratio is six or more.
APRA considers a DTI ratio of six times or more to be high. According to APRA’s most recent figures, the proportion of new residential mortgages originated by ADIs at debt-to-income ratios above six times rose from 23.8 per cent in the September quarter last year to 24.4 per cent in the December quarter.
High DTI numbers rose 7.1 percentage points over the 12 months to December, reflecting the increased risk borrowers were taking on in the face of strong growth in house prices and debt levels.