On the heels of a serious housing crisis, rules for flexible mortgages may be changing as banks are being forced to help their customers. Although many banks still continue to charge high rates for flexible mortgages, the increasing amount of foreclosures has forced others to rethink their lending practices. When flexible mortgages go into default, everyone loses and banks across the country are starting to realize that lowering their rates is going to be necessary, at least for the short term. However, with the lower rates on flexible mortgages, the banks are also making it harder to get an approval, in an attempt to lower their risks.”We are definitely seeing lenders tightening up their lending standards and lending criteria,” says Mark Hewitt, the general manager of sales and operations with Australian Finance Group, which describes itself as Australia’s largest mortgage broker. “In the credit crunch, with the difficulty of raising money, lenders are looking for assets to be much cleaner.”Paul Dowling, the principal analyst with banking research firm East & Partners stated, “There’s a general move towards more conservative lending but I wouldn’t quite describe it as credit rationing. The banks have money to lend - it’s a question of the [borrower’s] credit profile and the [profit] margin.”
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