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Effective from 30 July, CBA introduced lenders mortgage insurance (LMI) waivers for various professionals.
These changes include:
- Pharmacists: The minimum gross income requirement has dropped from $150,000 to $100,000 per eligible applicant, making it accessible to more early-career professionals.
- Medical professionals: Eligibility now includes those with limited registration, such as interns or doctors in supervised practice – a big win for junior doctors.
- Banking professionals: CBA has removed the requirement to have salary credits to a CommBank account prior to settlement, offering greater flexibility.
- Judges and magistrates: These professionals can now qualify for waivers using any one of several forms of evidence, such as a payslip, tax return, or appointment letter.
Home Loan Experts said these changes are a smart way to ease the burden of lending for professionals.
According to senior mortgage broker Jonathan Preston, these professions are made up of borrowers with low arrears rates and high loan sizes.
Acknowledging this with targeted policy is helping reduce hurdles and streamline processes. Preston said this is especially important for people in these fields as they’re often time-poor.
“If a broker says lender one needs all this proof but CBA needs only payslips, then it’s clear which lender has the appetite for business,” said Preston.
He believes that this targeted policy is “just the beginning” and expects other lenders to follow.
Preston also anticipates lenders updating LMI policy depending on the borrower and where the property is located.
“I find it unbelievable that LMI prices are the same for everyone. If you are an LMI insurer, why are you insuring someone at 1.00 servicing, 90 per cent LVR with a property in a bad area at the same price as someone servicing at 2 at 90 per cent LVR with a property in a highly marketable area?” Preston said.
Home Loan Experts mortgage broker Siddhartha Bajracharya believes the targeting of LMI policy rather than rates is a strategic move to boost efficiency.
“They are targeting people in professions where the income level is above average. I think they are looking to cross-sell as well – with credit cards and personal loans,” he said.
“Also, these clients are early on in their profession, so if the bank can get hold of them now, it can leverage many of its products in the future, as these clients’ income will be at the higher end eventually. Plus, there is a scope for them either to upgrade the property in the future or buy investment properties.”
[Related: Major banks dominating LMI loan market]
