ANZ tightens lending rules for borrowers

ANZ Banking Group will take a more cautious approach towards property borrowers' expenses from April.

ANZ is the final big bank to toughen rules on living expenses, in response to APRA concerns that banks have issued loans too easily.

Its note to mortgage brokers, ANZ said it would change the way living expenses were calculating home loan totals.

What the more prudent bank views as a "minimum" living expense will depend on the borrower's income, the number of dependants they have, and whether the application is for a joint or individual loan.

The changes, to take effect from April 4, Fairfax Media reported.

Mortgage brokers were advised on common scenarios, such as a hypothetical couple with two children wanting to buy a $500,000 investment property.

The slide pack says that due to the bank changing its estimate of such a couple's minimum living expenses, the maximum amount they could borrow would fall more than $50,000.

ANZ will also tighten assessments of overtime pay, bonuses and commissions. 

It will also lower its interest rate "buffer" – a rate that tests how borrowers would cope if interest rates rose.

"We regularly review our retail credit policies to ensure that lending remains prudent and aligned with risk appetite in light of the competitive, economic and regulatory environment," an ANZ spokesman said.

"For our customers, these changes are designed to ensure that we continue to assess any application for credit in a prudent way in view of their individual circumstances."