Financial Performance and Remediation Update
HOUSING LENDING PRACTICES & REQUIREMENTS
KEY ORIGINATION REQUIREMENTS
Income
Household
expenses
Serviceability
Existing debt
•
Income verified using a variety of documents including payslips
and/or checks on salary credits into customers' accounts
• 20% shading applies to less certain incomes (temporarily
increased to 30% in May 2020, reduced back to 20% in
November 2020)
Assessed using the greater of:
•
•
.
•
•
Customers' declared living expenses, enhanced in 2016 to break
down into granular sub categories
Household Expenditure Measure (HEM) benchmark plus specific
customer declared expenses (e.g. private school fees). HEM is
adjusted by income and household size
Assess customers' ability to repay based on the higher of the
customer rate plus serviceability buffer (3.0%¹) or the floor rate
(4.95%)
Assess Interest Only loans on the full remaining Principal and
Interest term
Verify using declared loan statements and assess on the higher
of the customer rate plus serviceability buffer (3.0%¹) or the floor
rate (4.95%)
• Assessment of customer credit cards assuming repayments of
3.8% per month of the limit
Assessment of customer overdrafts assuming repayments of
3.8% per month of the limit
(1) Serviceability buffer increased by 0.50% to 3.00% as of 1 November 2021
LOAN-TO-VALUE RATIO (LVR) LIMITS
Principal & Interest - Owner Occupier
Principal & Interest - Investor
Interest Only Owner Occupier
Interest Only - Investor
95%
90%
80%
90%
80%
'High risk' postcodes (e.g. mining towns)
70%
'At risk' postcodes
•
OTHER REQUIREMENTS
Loan-to-Income decline threshold of 7x
Debt-to-Income decline threshold of 9x
•
Lenders' mortgage insurance (LMI) applicable for majority of
lending >80% LVR
•
LMI for inner city investment housing >70% LVR
Apartment size to be 50 square metres or greater (including
balconies and car park)
NAB Broker applications assessed centrally - verification
and credit decisioning
Maximum Interest Only term for Owner Occupier borrowers
of 5 years
63
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Australia
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