ANZ has tightened trust lending to existing customers, with stricter ownership, guarantee and LVR requirements. (Source: AAP\/Getty) <\/p>\n
ANZ<\/a> has joined Commonwealth Bank<\/a> and Macquarie in tightening the screws on home loans to trusts and companies. Banks have been introducing new rules for home loan borrowers<\/a> amid concerns over social media videos encouraging the creation of trusts and company structures as a way to access \u201cunlimited loans\u201d.<\/p>\n An ANZ spokesperson confirmed to Yahoo Finance the bank has changed its policy requirements for home loans in a company or trust name<\/a>. The bank will now only lend to existing customers in this scenario, and the loan will be limited to a maximum 70 per cent loan-to-value ratio.<\/p>\n \u201cWe continuously review our credit policies and settings to ensure they remain appropriate and sustainable,\u201d the spokesperson said.<\/p>\n RELATED<\/p>\n Borrowers will need to be one of the directors of the borrowing entity, provide a personal guarantee and hold a combined 25 per cent or greater ownership in the borrowing entity.<\/p>\n They\u2019ll also need to have a \u201csatisfactory\u201d account history and have been with the bank for at least six months. The new rules came into effect on January 8.<\/p>\n ANZ\u2019s move follows Macquarie Bank\u2019s decision in October<\/a> to stop lending to borrowers using trusts or companies altogether.<\/p>\n Commonwealth Bank also pumped the brakes on the type of lending<\/a> in November, so only existing customers will be able to borrow in such a way.<\/p>\n Do you have a story to share? Contact tamika.seeto@yahooinc.com<\/a><\/p>\n Lending to trusts has come under the spotlight due to a rise in videos on social media spruiking the method as a way to skirt serviceability requirements and access \u201cunlimited\u201d borrowings.<\/p>\n APRA, the banking regulator, requires banks to assess mortgage applicants on their ability to pay in the event interest rates rise by 3 per cent.<\/p>\n But, if you purchase under a trust or company structure, this serviceability buffer<\/a> may be able to be circumvented.<\/p>\n Macquarie said it had received enquiries from customers wanting to borrow via a trust or company structure when it wasn\u2019t actually suitable for them.<\/p>\n “Borrowing via a trust or company is a very small part of the market and of our home lending, but has recently become the focus of attention on some social media platforms,” a Macquarie Bank spokesperson told Yahoo Finance.<\/p>\n “The changes we’ve made are part of our ongoing focus on responsible lending, ensuring our customers only take on finance suitable to their individual circumstances.”<\/p>\n It also cited factors like rising application volumes and new anti-money laundering regulations coming into effect, which would require lenders to have additional verification for trust and company loans.<\/p>\n It comes ahead of APRA imposing restrictions on home loans<\/a> from February 1 to limit the number of high-risk loans being issued to borrowers.<\/p>\n Under the changes, no more than 20 per cent of a bank\u2019s new loans can have a debt-to-income ratio of six or more. For example, that would capture someone with an income of $100,000 who got a loan that made their total debts above $600,000.<\/p>\n This will apply for both investors and owner-occupiers.<\/p>\n \u201cOne of the key structural risks to system stability that APRA has long been concerned about is high household indebtedness,\u201d APRA chair John Lonsdale said.<\/p>\n \u201cRising indebtedness has in the past often been associated with an increase in riskier lending and rapid growth in property prices.\u201d<\/p>\n Get the latest Yahoo Finance news – follow us on Facebook<\/a>, LinkedIn<\/a> and Instagram<\/a>.<\/p>\n