Banks restrict first-home buyers maximum credit limit

Monday August 17, 2009

Australian banks have begun to lower their maximum home loan credit limits in response to the recent month's activity regarding the Federal Government's cash handouts. In fact, six of the nine major Australian banks brands have significantly lowered their limits, most taking effect around four months ago when first-home buyers' grants for new and existing properties amounting to $21,000 and $14,000, respectively, resulted in a major boast to the sales in that area of the industry.

Additionally, major interest rate cuts by the Reserve Bank of Australia and subsequent major banks has also impacted with low borrowing costs attracting higher numbers of first-time home buyers to the market that what would be expected for an economy that is in the current financial climate.

Banks appear to have taken advantage of these outside factors to keep people interested in the homeowners market by offering significant discounts on the most popular form of mortgage borrowing, namely the standard variable mortgage rates.

Deutsche Bank has recently completed research into these actions by cold calling several banks and offering a common hypothetical situation to see what the banks would offer.

Researchers found the following figures:

• St George down from $455,000 to $400,000
• Westpac down $479,000 to $446,000
• ANZ down $485,000 to $439,000
• BankWest down $470,000 to $442,000
• Bendigo Bank down $430,000 to $420,000
• National Australia Bank down $310,000 to $290,000
• Commonwealth Bank remained steady at $420,000
• Suncorp remained steady at $450,000
• Bank of Queensland raised its maximum by $7000 to $425,000

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