The Westpac Group has updated its credit policies concerning borrower expenses. Starting April 17, borrower expenses will need to be captured at an “itemised and granular level” across 13 different categories, including expenses that will continue after settlement, as well as debts with other institutions.

These changes, which will apply to all loans submitted to any bank within the Westpac Group, aim to “provide a more accurate view” of borrower expenses so that the bank can “better determine [the borrower’s] financial situation and repayment ability”.

Expense categories have been broadened

Living expenses can no longer be bundled. Instead, brokers will need to capture all applicable expenses over 13 categories during the needs assessment conversation.

“Absolute Basic Expenses” will be replaced with seven mandatory expense types:

• Clothing and personal care
• Groceries
• Transport
• Medical and health
• Insurance
• Telephone, internet, pay television, and media streaming subscriptions
• Recreation and entertainment

There will be additional optional expense types:

• Owner-occupied property utilities, rates, and related costs
• Childcare
• Education
• Investment property utilities, rates, and related costs

An additional category of rented property utilities and related costs will be applied if the customer’s post-settlement housing situation is rent, board, or living with parents.

If the monthly rental amount is stated to be less than $650 each month, a “notional” rent amount of $650 per month will be applied automatically to each loan applicant, regardless of marital status.

Evidence needs to be provided for other financial liabilities

It will also be compulsory for prospective borrowers to provide evidence of other financial liabilities, including ongoing rent/board, child support, and any secured or unsecured debts held with other financial institutions.

These can include documents, such as bank statements, signed and dated rental agreements, letters from property managers, and child support agency letters, among others.

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