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Yellow Brick Road removes proof of savings in home buying applications
AN emerging non-bank lender has upped its fight against the major banks by removing the need for its home loan applicants to show proof of savings. The intrepid move, initiated by Mark Bouris' Yellow Brick Road, is aimed squarely at first home buyers who either are gifted a deposit from their parents, or inherit cash. Even a favourable night at the casino won't raise questions, as long as the deposit is on the table and the repayments can be met. Under existing strict lending criteria at the major banks, such home buyers would be denied a loan because they could not show the lender any proof they are good savers. Most lenders make applicants submit upwards of three months of bank statements to show a savings pattern. Fresh from his debut TV series The Apprentice, Yellow Brick Road is Mr Bouris' latest incarnation of his deep-seated desire to unsettle the four major banks and bring competition to the lending game. He told The Daily Telegraph the new First Step loan product removes a major hurdle that stops thousands of Australians from buying property. "Since the First Home Owners Grant was reduced, banks knocked out a lot of first home owners from applying because they are relying on a combination of the grant and a gift from parents or someone else," Mr Bouris said. "The way the banks changed the credit criteria is they say 'well, we want to be really sure about your savings, so you convince us that you're a good saver'. "For our loans, if you have inherited the money, won it on Lotto, or you received a great tax return, it doesn't matter, as long as you've got a deposit and can service it." The Yellow Brick Road product is also expected to resonate among ethnic groups where it is particularly common for parents to give the entire deposit to their children. Mr Bouris said it was yet another way non-bank lenders could steal away some market share from the major banks who have steadily increased their grip on the home loans market since the onset of the global financial crisis. Since the Federal Government scaled back its First Home Buyers Grant to its historical level of $7000, first home buyers vanished from the property market. Australian Bureau of Statistics figures from June show first home buyer commitments, as a percentage of total owner-occupied housing finance commitments, fell 11.1 per cent, the equivalent of 60,000 first home buyers. But the Consumer Credit Legal Centre's Katherine Lane said lenders with a non-savings deposit policy must prove they will maintain responsible lending standards. http://www.news.com.au/money/property/yellow-brick-road-removes-proof-of-savings-in-home-buying-applications/story-e6frfmd0-1225912093936 |
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