Your spending habits may determine the outcome of your application

cairns mortgage broker jason thomson



With a ‘good income’, monthly savings and no credit cards, Renee’s bank still knocked her back.

When Renee Vanson went to her bank, she thought she was in a strong position to refinance her loans. Much to her “disappointment”, she says her bank told her it could not help because she was “spending too much”.


Article Source: ABC News 6/3/19 article titled: “With a ‘good income’, monthly savings and no credit cards, Renee’s bank still knocked her back”.


Key points:

  • Mortgage brokers are reporting banks are taking a “very harsh view on living expenses”
  • The Australian Banking Association says banks have been required to strengthen lending requirements
  • Civil Liberties Australia says the rules around data protection are vague, and that banks had an ease of access to information about people’s spending habits


“If you’ve got no outstanding debts, you’ve got your insurance, school fees for the year, power, phone, petrol — and you’re still saving money as well — who’s to say that you’re spending too much,” she said.

“I just thought it was very unjust,” she said.

Ms Vanson said she felt “scrutinised” over her living expenses.

She said she and her partner have a “really good disposable income”, and she has never had a credit card because she did not believe in living beyond her means.

Now in her 40s, Ms Vanson said she believed she had worked hard and should be allowed to spend her spare money however she sees fit.

“We’re still saving a certain amount of money per month. We are in our depths to be spending money,” she said.

“We just like to enjoy going out for a meal every now and then as most people do”.

“It actually got to the stage where I thought, ‘I’ll just go to the ATM and buy this, this and this, and [the bank is] not going to know’.

“And then I thought, ‘I’m 44, I shouldn’t be having to do that with my money’.”

She said her bank had offered her “an apology”.

“They said ‘it’s not our fault, it’s just the [banking] royal commission’,” she said.

Ms Vanson said while her own bank refused her, she managed to “easily” move to another bank.

Her bank was contacted as part of this story, but a spokesman said the institution did not comment on individual cases.


Application rejected over ‘takeaway’ lunches

Mortgage brokers said Ms Vanson’s scenario was not an uncommon one.

Hobart mortgage broker Narelle Kerstan said many of her clients had also been denied loans by their “home banks”, but qualified elsewhere.

“Probably a third of my business would be from people who have had issues with their living expenses or spending habits,” she said.

Another broker, Emmanuel Marios, said one of his clients was refused a home loan last month because he had spent $250 a fortnight on takeaway food.

“[He was] visiting a takeaway shop every day essentially for lunch,” he said.

“That’s how it is. Obviously, people are going out more often, they’re not packing their own lunch anymore.”

He said many banks felt the spotlight of the royal commission, and borrowing had become harder.

“Obviously the royal commission has a big factor about it and lending is getting stricter and stricter,” he said.

Melbourne mortgage broker David Thurmond said while banks should look into prospective client’s finances to make sure they were able to afford the loan, many had taken a “silly” approach after the royal commission “when common sense isn’t applied”.

“Unfortunately, when banks change policy, they go hard right. And then, over time, they realise they’ve gone too far right, and they need to pull back a little bit,” he said.

“When they employ this black and white policy around living expenses, common sense falls by the wayside”.

“A lot of clients that would have qualified easily a year ago, two years ago, are now struggling to qualify because banks are applying a very harsh view on living expenses.”

With many financial transactions taking place electronically, banks have an ease of access to people’s spending habits.

Rajan Venkataraman from Civil Liberties Australia said he was concerned “the rules had not kept up with that proliferation of data”.

“There’s a lot of uncertainty about what exactly your rights are, and people are in a very weak position to say no when institutions like banks, financial institutions, insurance companies, landlords and employers in general start demanding information from you,” he said.

The ABC contacted several major banks for this story, including ANZ, the Commonwealth Bank of Australia, Westpac and the National Australia Bank. The banks said they had robust processes in place to ensure responsible lending practices.

But the Australian Banking Association said banks were required by law to lend responsibly and assess a borrower’s ability to meet their repayments.

“Over the last few years, a key focus of the regulators has been to strengthen lending requirements and they have required banks to exercise greater caution when issuing loans, particularly higher risk home loans,” a spokesman said.


Related Articles on this topic:

Want a loan? Be a model spender three months before you apply

Lenders increasing scrutiny on loan applications


Cairns Mortgage Broker – Jason Thomson is a Mortgage Adviser and Finance Broker based in Cairns with clients all around Australia. Over 100 client reviews featured on his website prove that Jason is a trusted industry professional, facilitating great outcomes for his clients. Using his wealth of experience in financial services, he thrives on delivering superior service. Jason is very approachable and is always looking for new clients to help in the often confusing world of finance and property. Offering a no fee service, you’ve got nothing to lose by having an obligation free chat with Jason today.