CBA released their financial results for the first half of 2024 which revealed that brokers continue to abandon them as their borrower of choice. There was a whopping 33% decline in applications flowing their way from brokers in the six months to 31 December, 2023.
Not that long ago they were the dominant player in the market not just because they had a competitive offering, but also market leading approval processing times.
In the last few yers however, all the other major banks have successfully invested in improving their back office processes and systems, and as a result, CBA no longer has an “ease of doing business” edge over the others.
I have no doubt that as the mortgage market heats up again with the settling of interest rates, CBA will once again come out swinging and get well and truly back in the game.
In this week’s newsletter, we explore credit scores which are a vital ingredient when it comes to getting a home loan approval.
When applying for a home loan, your credit score is a critical factor lenders consider. It ranges from 0 to either 1,000 or 1,200, reflecting your financial responsibility with debts. For lenders, your credit score indicates the risk you pose as a borrower, with low scores raising concerns as a potential red flag.
While not the sole factor, your credit score heavily influences mortgage approval, whether it’s your first loan or a refinancing endeavour. Understanding, checking, and if necessary, improving your credit score is crucial for your mortgage application.
What influences your credit score?
Credit reporting bodies consider various factors like the number and types of accounts, credit limits, credit utilisation, credit history length, and payment history to calculate your score. In Australia, Equifax, Experian, and Illion are the main credit reporting agencies.
The minimum credit score preferred by home loan lenders varies. A ‘good’ score as outlined below is generally satisfactory to most lenders, indicating a decent repayment record with occasional minor issues.
A ‘low’ credit score may indicate past defaults or reckless credit behavior, while an ‘excellent’ score reflects disciplined repayment habits and credit management.
What are the typical scoring bands?
If your clients would like more information about their credit score, have them call us on 1300 366 296 for an obligation free chat.
Variable
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR.
1 Year Fixed
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR. At the end of the three year fixed period, the borrowers interest rate will revert to a standard variable rate for the life of the loan.
