Broker’s warning about surprise transactions that could affect your home loan application

Australians have been warned to be careful about the surprising transactions that could affect their home loan applications.

Nectar Mortgages broker James Marsh said buy now, pay later purchases and gambling are some of the transactions that banks look out for when assessing an applicant.

“The real red flags that banks are looking for are regular gambling transactions,” he said.

“Other things like buy now, pay later, payday loans, overdraws, and dishonours. But basically, anything that you didn’t disclose can be red flags.”

Marsh said the frequency and cost of these transactions that make it a concern depend on the bank’s discretion and on the applicant’s borrowing capacity.

“There’s no hard and fast rule,” he said.

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“The best time to clean up your statements was three months ago, and the second-best time is today.”

It comes as home buyers’ borrowing power has been dented by the Reserve Bank of Australia’s three rate hikes this year, bringing the cash rate to 4.35 per cent.

Despite keeping rates on hold at the last board meeting, persistently above-target inflation has led to three of the big four banks predicting another hike later this year.

But the federal government’s tax changes from the May budget, alongside those rate hikes, have caused some cooling in the housing market as investors retreat.

The Australian Bureau of Statistics earlier this month found that new home loans fell by $5.4 billion in the latest quarter to $97.6 billion.

It was the second consecutive drop in the value of new loan commitments and the first time lending has fallen for two quarters in a row in more than three years.

“Investors led the retreat, with the value of these loans dropping $4.2 billion or 10 per cent, after three interest rate hikes and the federal government’s property tax changes have taken plenty of shine off the property market,” Canstar data insights director Sally Tindall said at the time.

“Buyers across the country are feeling the pressure from both higher borrowing costs and reduced budgets, with many opting to sit on the sidelines to see where the chips land and at what price.”

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