subscribe to our newsletter

Westpac cracks down on self-employed borrowers

The major bank has announced a number of changes to its home lending policy, including a reduction to the maximum LVR for self-employed applicants.

Westpac Group – which includes Bank of Melbourne, BankSA and St.George Bank – has revised its residential lending policy as part of its ongoing response to heightened credit quality risks associated with the COVID-19 crisis.

The revisions include a temporary reduction to the maximum loan-to-value ratio (LVR) for self-employed applicants, and income shading changes, effective 17 May.

For self-employed applicants, Westpac has revealed that it will be lowering the maximum LVR to 80 per cent, with the exception of loans assessed under the Medico Sector Policy, where a maximum LVR of 85 per cent will apply.

The new maximum LVR will apply to both new owner-occupied and investment home loan applications with self-employed income.


Accordingly, under the new policy, self-employed borrowers will be temporarily excluded from receiving mortgage insurance.

Westpac claimed that the revision reflects the “impact that restrictions associated with the COVID-19 pandemic have had on self-employed workers”.

Moreover, the major bank has reduced the acceptable income threshold to 60 per cent across a number of non-base income types, including bonus, overtime, dividend and commissions income.

The threshold for superannuation, annuities, private pension and SMSF income has also been reduced to 80 per cent “where not evidenced as paid at a guaranteed value for life”.

These changes are the latest among several credit policy revisions from Westpac over the past month, which included the withdrawal of lender’s mortgage insurance waivers for the industry specialisation sector and the sports and entertainment industries.  


Such changes have come in anticipation of a spike in loan defaults off the back of the COVID-19 crisis.

Earlier this month, Westpac released its half-year results for the 2020 financial year (1H20), in which its credit provisions totalled $5.8 billion, reflecting expectations of a 63 per cent spike in credit losses, from $2.74 billion in 2H19 to $4.47 billion.

As a result, Westpac posted a 70 per cent slide in cash earnings after tax to $993 million.

[Related: Westpac braces for 63% spike in credit losses]

Westpac cracks down on self-employed borrowers

If you’re feeling overworked and overwhelmed in this fast-paced mortgage market, it’s time to make some changes, and the Business Accelerator Program can help! Tickets are on sale now. Work smarter, not harder, this year.

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

True Savings, a new online brokerage headed by former CBA executive Pete Steel, has entered the Australian mortgage market. ...

Pre-registrations have opened for Citi’s upcoming buy now, pay later offering, Spot., which will launch in October. ...

New Zealand’s central bank is primed to further tighten mortgage lending standards, following concerns with a rise in high-LVR and high-DT...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.