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Brighten reduces buffer, enhances policy to improve serviceability

Publication Date: Thursday, 8 February 2024
This article originally appeared in Mortgage Business

The non-bank lender has reduced its serviceability buffer and made some changes to its policy in a bid to address serviceability concerns.

Brighten Home Loans (Brighten) has announced more than 15 policy enhancements to “address serviceability concerns” being raised by brokers and borrowers.

According to the non-bank lender, brokers and borrowers have highlighted that serviceability hurdles in market continue to be too high for many borrowers, showcasing “the need for greater flexibility”. For example, the 3 per cent buffer currently applied to carded rates by the banks means that some borrowers are needing to demonstrate that they can service a loan with an interest rate of 9 per cent or higher.

To help more borrowers access credit, the non-bank lender has made a range of adjustments to its policy to help support more borrowers.

Brighten has now dropped its servicing buffer to 2 per cent and introduced an alternative servicing with a reduced buffer of 1 per cent above the applicable rate for eligible refinance loans.

It has also brought in a range of other measures, including:

  • Increased the rental allowance for all residential products to 90 per cent (in recognition of the robust residential rental market.
  • Enabled Australian trusts to be accepted as an acceptable borrower types for non-resident and expat borrowers.
  • Introduced a company wages option that enables self-employed borrowers to use 100 per cent of their salary or director’s wages from the past six months for servicing.
  • Removed the BAS requirement for one-year financials that are more than six months old.
  • Increased the maximum loan size for expat and non-resident customers to $2.5 million for the Sydney and Melbourne metropolitan areas and to $1.5 million for Gold Coast metropolitan areas.
  • Increased the maximum LVR to 75 per cent for high-density apartment units for expat and non-resident customers.
  • Extended the validity of offshore credit reports to 90 days from the date of formal approval.

Speaking of the changes, Brighten’s new chief executive Jason Azzopardi said: “Being deeply focused on enhancing the experiences of brokers and customers, we’ve listened to our brokers and implemented a raft of changes in our policies and products in response to their feedback.

“These enhancements are set to improve serviceability across our range of products, streamline paperwork and documentation processes, and respond effectively to the evolving needs of our diverse borrower base.”

Chris Meaker, Brighten’s head of sales, added: “We are committed to arming brokers with the necessary tools and products for the ever-evolving property market.

“Our latest policy enhancements address both immediate needs and prepare them for future opportunities in a diverse market.”

The non-bank has become the latest lender to reduce buffers and tweak policy to enable more borrowers to service mortgage tests, with Bluestone Home Loans having also recently dropped its serviceability buffer for near prime and prime loans with up to 70 per cent LVR from 2 per cent to 1.5 per cent.