CommBank’s new home loan checklist
THE nation's biggest bank is demanding customers to reveal intricate details of their daily living expenses including how much they spend on takeaway orders, beauty and hygiene products, transport costs, groceries, shoes and even internet streaming charges.
The Commonwealth Bank issued a notice to mortgage brokers on Thursday outlining 10 key categories they will be zooming in on when analysing monthly expenses for home loan applications.
And it's expected more banks will follow suit, putting the microscope over exactly what customers are frittering their money away on.
Online home auction platform LoanDolphin's chief executive officer Ranin Mendis expects more lenders to follow the CBA and delve deeper into exactly what customers are splashing their cash on.
"More banks will follow and implement similar changes in order to adhere by responsible lending and regulatory obligations,'' he said.
"For those who are overly leveraged, the recent changes will limit the number of lender options when looking to refinance their loans or looking to borrow for a new purchase."
He warned that banks often zoom in on customers' past three months of spending when they receive a new application.
"Upcoming borrowers should start analysing their own budget and adjust their expenditure ahead of time prior to their application,'' Mr Mendis said.
The move comes in the midst of the financial services Royal Commission which has shined a light on inappropriate lending practices by some of the major lenders.
A CBA spokeswoman said the latest moves were part of meeting responsible lending requirements.
"The Commonwealth Bank is committed to responsible lending and ensuring that we have a clear understanding of our customers' financial situations,'' he said.
"We constantly review and monitor our home loan processes and policies to ensure we continue to meet our responsible lending obligations and do the right thing by our customers."
Latest figures show in the first half of the 2017/18 financial year CBA wrote 178,000 new home loans.
The new monthly living expenses changes will become effective from July 19.
CBA'S MONTHLY LIVING EXPENSES CATEGORIES
- Children and pets - day care, sports, music, tuition.
- Clothing and personal care - hair and beauty treatments, clothing, shoes.
- Communication - internet, pay TV, media streaming, phone.
- Education - school/uni fees, books, materials, higher education.
- Food and groceries - fruit, meat, groceries, takeaway.
- Housing and property expense - water, gas, electricity, rates, cleaning services.
- Insurance - car, home and contents, life, landlord, private health.
- Medical, health and fitness - doctor, dentist, physiotherapy, glasses, gym fees.
- Recreation, travel and entertainment - sport, boat, holidays, dining out, alcohol, smoking, gambling.
- Transport and auto - bus, train, ferry, car registration, tolls, petrol, repairs.