Westpac closes part of RAMS
(21 January 2010 – Australia) Westpac has closed part of its RAMS Home Loans subsidiary, while it has also notified brokers that it has tightened some of its lending criteria.
The bank notified mortgage lenders that it will be tightening lending criteria for borrowers on house-branded loan products.
Westpac is lowering its loan-to-value ratios for new customers on standard variable mortgages from 92 percent to 87 percent; the new ratio levels took effect on Wednesday.
Borrowers that are applying for high risk, low documentation loans will also now only be able to borrow up to 80 percent of the property they are buying.
Mortgage Choice chief executive, Mike Russell, believes that Westpac is reining in its exposure to home borrowers since its controversial decision in December to boost its rate on variable mortgages by almost double the Reserve Banks increase.
Mr Russell said that the RAMS announcement and the tightening of lending criteria shows that Westpac is withdrawing from the home loan market until they get their funding issues in order.
The decision is at odds with the general trend which has seen more lenders re-enter home lending since the end of last year, Mr Russell highlighted.
A RAMS spokesman said that lending growth in the last year had created funding issues requiring the active management of lending volumes in the last two months.
Westpac added that decision continues Westpac’s efforts to manage its mortgage lending in an appropriate and responsible manner.
Westpac is lowering its loan-to-value ratios for new customers on standard variable mortgages from 92 percent to 87 percent; the new ratio levels took effect on Wednesday.
Borrowers that are applying for high risk, low documentation loans will also now only be able to borrow up to 80 percent of the property they are buying.
Mortgage Choice chief executive, Mike Russell, believes that Westpac is reining in its exposure to home borrowers since its controversial decision in December to boost its rate on variable mortgages by almost double the Reserve Banks increase.
Mr Russell said that the RAMS announcement and the tightening of lending criteria shows that Westpac is withdrawing from the home loan market until they get their funding issues in order.
The decision is at odds with the general trend which has seen more lenders re-enter home lending since the end of last year, Mr Russell highlighted.
A RAMS spokesman said that lending growth in the last year had created funding issues requiring the active management of lending volumes in the last two months.
Westpac added that decision continues Westpac’s efforts to manage its mortgage lending in an appropriate and responsible manner.
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