Mike Pero Mortgages boss warns of “forensic underwriting”
Collins told TMM Online his adviser network has noticed lenders scrutinising every detail of a customer’s personal expenses, rather than using an expenses benchmark. He says lenders are asking customers for their average spend on items such as streaming subscriptions and gym memberships.
Collins believes pressure from the Royal Commission in Australia has made lenders change their tune. "There has certainly been a big difference before and after the Royal Commission. It seems to have had a flow on effect [to New Zealand]."
Collins says technology is making it "easier for banks to look at discretionary spending", and believes first time buyers and younger borrowers are most likely to be impacted by the "forensic" attention to detail.
Collins says customers need to be aware of “how little expenses add up”. He believes small expenses, including Sky and Netflix, can make such a difference to an individual’s application, that they can impact borrowing power by up to $50,000: “This pattern of ‘forensic underwriting’, where lenders look closely at transaction records, is only going to increase. Technology is making it easier for them to assess loan applications and lenders are keeping close tabs on their exposure to risk."
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