Banks are running serviceability tests based on customers’ current income, even if they have been temporarily furloughed due to the crisis, or put on reduced hours during the lockdown, advisers report.
Advisers say some banks are not accepting past earnings, or projected future earnings, while calculating serviceability.
This approach makes it difficult for borrowers to complete home purchases, pay for new-builds nearing completion, or refinance mortgages during the Covid-19 lockdown.
The issue was highlighted in a recent survey of the lending market conducted by independent economist Tony Alexander.
For debt-servicing ability, current virus-constrained income levels are being used, not expected income levels in the future when things are expected to be better, he reported.
“In some cases, anticipated bonuses, overtime, commissions are not being considered for income projection and therefore…