Lending Lockout Hitting Housing Recovery

Tighter lending criteria and persistently high house prices are holding back a stronger recovery in the housing market, according to a new report.
The JPMorgan Australian mortgage industry report shows that nearly 70 percent of those who are unsuccessful in obtaining refinancing are being declined on the basis of insufficient income or inadequate loan-to-value ratios, as regulators push for stricter standards from lenders. Martin North, principal of Digital Finance Analytics, who contributed to the report, said that in earlier years the most common reason for a refusal was a change in the personal circumstances of the borrower.

Although the housing market has shown signs of life following interest rate cuts, Mr North said the stricter lending criteria had turned off specific mortgage segments and prevented deals that banks perhaps would have welcomed before the Global Financial Crisis. “So we have a proportion of the market that is locked out and cannot potentially refinance," Mr North said.
Source: http://www.smh.com.au/business/borrowers-hit-brick-wall-on-refinancing-20121016-27ob3.html

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