Banks' Hidden Red Flags for Home Loan Applicants
Australians have been warned about surprise transactions that could impact their home loan applications. Nectar Mortgages broker James Marsh said banks scrutinize applicants' financial records for regular gambling transactions, buy now, pay later purchases, payday loans, overdrafts, and dishonors.
The frequency and cost of these transactions are key factors in determining whether they're red flags, according to Marsh. He stressed that there's no hard and fast rule, leaving it up to the bank's discretion and the applicant's borrowing capacity.
The warning comes as home buyers' borrowing power has been affected by the Reserve Bank of Australia's three rate hikes this year, pushing the cash rate to 4.35%. Despite keeping rates steady at the last board meeting, persistently above-target inflation has led several big four banks to predict another hike later this year.