The Australian Prudential Regulation Authority (APRA) dismisses claims it is not monitoring non-ADIs as strictly as major banks.

Lenders are also requiring mortgage brokers, who act as intermediaries between the borrower and lender, to deep dive into their clients' financial history, current income and future plans.

Those details are then being supplied to international credit agencies which match the answers with comprehensive records on the client's financial history, existing loans, payment history and any defaults, late payments or bankruptcies.

Many banks are still exceeding minimum prudential benchmarks for household spending, which means they are likely to continue turning the screws on borrowers, says online lender Tic:Toc.

But they continue to compete aggressively for borrowers who have jobs, good credit records, a big deposit and income that comfortably covers expenses.

Lenders such as CBA and Bank of Melbourne are offering discounts of between 50 and 130 basis points for qualifying borrowers, with even bigger discounts for larger deposits such as 20 per cent.

Other lenders are offering cash incentives to cover the legal and banking costs of buying the property.

Mortgage brokers claim most rejections occur because applicants fail to understand, or accurately complete, details about their living expenses.


Until recently all that was required for a borrowers' income and outgoings were estimates based on discussions and minimal employment details.

"A lot of borrowers are vastly under-estimating their expenditure," warns Christopher Foster Ramsay, principal of mortgage broker Foster Ramsay Finance. "They really have no idea of what they spend."

The new round of mortgage tightening has been triggered by fears about rising property prices and record levels of household debt.

For example, CBA, the nation's largest lender, has 10 categories covering spending on everything from pets to petrol, food, footy, internet and school fees.

ANZ is introducing 10 borrower scenarios covering different repayment situations, such as downsizers, older employees working past their retirement dates and use of retirement savings to pay off mortgages.

It is also introducing "comprehensive credit reporting" checks, with third-party agencies checking on applicants' credit card, home, personal or car loan debt.

This will enable the bank to cross-reference details in an application to investigate other debts that have not been listed on loan applications, undisclosed credit limits or amounts owing that are misrepresented.

Applicants without unconditional approval should be wary of committing to a property before securing unconditional approval from a lender, according to Foster-Ramsay.

The property may be unacceptable to a lender, lender policies could change and the lender valuation might not match the borrower's expectations.

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