RBA urges banks to keep lending standards high

Reserve Bank governor Philip Lowe has reminded banks they need to continue rigorously assessing home loan applications.

“It is important that lending standards remain sound in an environment of low interest rates and rising housing prices,” he said in a recent speech.

“The RBA does not, and should not, target housing prices. We do, though, have a strong interest in trends in household borrowing, especially given the already high level of household debt in Australia.”

What, exactly, are ‘high lending standards’? Well, it can differ from lender to lender, but it’s based on three core factors:

1. Employment status and income
2. Savings and credit history
3. Existing loans and equity

Where it gets tricky is that different lenders assess those factors differently, and so reach different conclusions on who they lend to. As a mortgage broker, I can give you expert advice on which lender would best suit your personal circumstances.