One of every three customers of mortgage brokers can’t get a home loan.

Thanks to the fixing of bank policy by loan providers, as per Hank Hong, overseeing executive of a Sydney-based loaning arrangements supplier.

“[Credit tightening has] affected servicing and how much you can actually lend based on incomes,” Hong told The Adviser.

“Certain offers that they put into place, higher living expenses, certain buffer rates, have reduced what clients can borrow.”

“In the recent year, I would advise one out of three arrangements that come into my hands couldn’t obtain the assets they were after.

A few years back, it was possibly one out of five or one of every six customers.”

Hong included that numerous borrowers who acquired unsuitable loans in the past will battle to meet their mortgage payments.

“Existing customers are returning in light of the fact that they’re not having the capacity to repay the loans that they were at first approved for as a result of the fixing of the credit policies” he said.

“Backpedaling two years prior, individuals were getting million-dollar loans— $1 million to $1.5 million — with just $80,000 incomes or joined wages of $150,000.

“They were on fixed rates of 3.99 for every cent on interest only loan, which they could manage. Yet when these fixed rates fall off and they revert to principle and interest repayments, those customers will battle to make the repayments since they haven’t adjusted to a way of life of paying a loan back with a principle portion.”

While Hong trusts that a significant number of the credit updates were required, he did think that banks have gone too far and ought to backtrack.

“In the event that they were attempting to go 100%, they’ve presumably gone 150 or 160 and they have to backtrack possibly 30%”