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Westpac tightens credit for self-employed amid COVID-19 risks

Westpac is tightening borrowing capacity for self-employed customers and people living in areas that are dependent on tourism, a move aimed at reducing risks sparked by the coronavirus pandemic.

The country’s second-biggest bank on Monday said self-employed borrowers taking out new loans would be allowed a maximum loan-to-valuation (LVR) ratio of 80 per cent, or 85 per cent for some medical workers including doctors, dentists, vets, pharmacists and optometrists.

Westpac lowered its loan-to-valuation ratio limit for self-employed borrowers to 80 per cent.
Westpac lowered its loan-to-valuation ratio limit for self-employed borrowers to 80 per cent.CREDIT:FAIRFAX

Previously the bank had allowed owner-occupiers who are self-employed to borrow up to 95 per cent of a property’s value, or 90 per cent for property investors.

The banking giant will also introduce an LVR cap of 70 per cent for new loans in postcodes in tourism-heavy areas, mainly in Queensland. “With recent changes to Australia’s economic outlook due to COVID-19, we are making some temporary adjustments to our home lending criteria,” a bank spokeswoman said.

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