Latitude has made changes to its risk and underwriting policies after recently lowering its credit risk and tightening its serviceability criteria for new borrowings amid the economic ramifications of the coronavirus pandemic.
Explaining the reason for the latest changes, the lender said they “reflect the improving economic environment as Australia comes out of the challenges of COVID-19”, adding that it will maintain proof of income practices across its asset and personal loan products.
The lender has announced the following changes to its risk and underwriting policies:
- Casual, seasonal, temporary, and contractor employment types will now be accepted, with all industries included;
- It has removed the self-employment underwriting referral rule;
- It has removed the $100 surplus capacity buffer;
- It has re-introduced D grade applications; and
- It has made new higher lending limits available for borrowers.
The changes were effective from 7 October, with Latitude explaining that there will be no impact to applications received prior to this date.
All applications received prior to this date will be accepted, and decisions will be made according to the lender’s current credit policies, it said.
“Our income assessment policies have not changed, which ensure that we continue to be a responsible lender and protect your customers, while supporting you to get your customers the loans they need today,” the lender said.
It noted that these risk policy changes are implemented until further notice.
When COVID-19 reached Australian shores and resulted in economic tumult, Latitude joined other lenders in reducing its credit risk appetite to ensure it “continues to be a responsible lender”.
Pepper Money withdrew rate and fee promotions on new loans, which it said would enable it to better support existing mortgage customers impacted by COVID-19, particularly those in sectors most affected by the pandemic.
However, the lender recently wound back measures introduced at the height of the COVID-19 crisis, and resumed accepting 100 per cent of casual and overtime income, commissions and bonus income, and cash out requests for “verified purposes”.
The latest changes by Latitude have followed those by Westpac, which recently announced a number of changes to its credit policy, including the rollback of non-base income shading restrictions that were introduced in response to the COVID-19 crisis.
The bank said it would resume accepting 80 per cent of most non-base income (up from 60 per cent) in its serviceability assessments.
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Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.