Westpac emblem on street sign

Westpac consolidates its mortgage products in major product review

15 July 2017

Westpac is ceasing to offer mortgage and equity-release products following a high-level review of its product range and underwriting standards.

The top-down review is expected to reassess dozens of loans and lending packages, which include credit and insurance products, as the bank and its subsidiaries adjust lending criteria to changing market conditions. The proactive move by Westpac comes as each of the big four banks continue to tighten lending for interest-only loans, increase mandatory deposits for home loans and generally tighten access to credit-related products.

"Westpac is currently reviewing our suite of home loans," the bank is telling mortgage brokers in a confidential memo. It claims the bank needs to "simplify systems and processes to achieve productivity in the way we operate".

This initiative by Westpac confirms the speculation that the bank was undergoing an extensive product review following the recent withdrawal of equity-release products offered to older property owners, such as Seniors Access and Seniors Access Plus, which are both lines of credit secured against the borrowers' property.

The latest products to be withdrawn include equity access low documentation loans, which is a revolving line of credit secured against property and a range of fixed rate low documentation home loan.

Low documentation loans are designed for borrowers who cannot provide the usual required paperwork to the lender, such as tax returns and financial statements. They are popular with self-employed or those relying irregular bonus payments.

The product consolidation by Westpac is expected to flow onto the Wetpcac Group including Bank of Melbourne, St George Bank and BankSA.

Westpac recently announced it was no longer allowing existing borrowers from switching into lower cost loans and was raising popular interest-only lending rates by 34 basis points. They also hit property investors using self-managed super funds with higher rates, tougher policies and processes.

Other major lenders, including Commonwealth Bank of Australia, the nation's biggest mortgage and credit card provider, are cracking down on issuing credit cards to property borrowers.

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