Macquarie Bank, ING introduce BNPL serviceability calculator in loan crackdown

Australians who use buy now pay later (BNPL) services like Afterpay and Zip could be in for a rude shock as banks crack down on their lending policies.

This week, two Australian banks informed brokers that customers’ use of BNPL would specifically be taken into account when considering their ability to pay back a loan.

Macquarie Bank introduced the new rule on Monday while The Australian reported this also came into effect for ING customers this week.

A Macquarie Bank spokesperson confirmed to that someone applying for a loan would now have to declare their BNPL limit, as well as their current balance and monthly repayment.

ING has introduced a similar policy, which they said was in line with new requirements from the Australian Prudential Regulation Authority (APRA). understands some of the other big banks have already been assessing BNPL to comply with the new regulations since they were announced in June.

Macquarie Bank sent a message to all their brokers informing them of the change.

“We’re updating our credit policy to include ‘buy now pay later’ (BNPL) commitments in our debt-to-income ratio and serviceability calculations,” part of the emailed note read.

BNPL will now be included in Macquarie’s serviceability calculator.

The change began from Monday, December 19. However, there will be a grace period until January 3.

After then, new applications submitted must use the new serviceability calculator.

As for ING, a spokeswoman confirmed to that they had introduced a BNPL transaction as a debt when assessing a loan application but wouldn’t go into their specific policy.

According to The Australian, BNPL debts that are being paid back through instalments will be treated as a personal loan, where the amount left to pay and the total monthly amount is taken into consideration.

If it’s a more short term loan, it can be paid off and then won’t be factored into a customer’s borrowing capacity.

The spokeswoman added to “We’ve always taken a prudent approach to lending and consider that the policy changes are designed to support customers in meeting their repayment obligations.

“We don’t anticipate it will have a material impact on approvals.”

It also comes after Financial Rights Legal Centre senior policy and advocacy officer Drew MacRae last month said that soaring inflation meant some people were now turning to BNPL services to fund necessities such as groceries and energy bills.

“If you have a set of regulations that make sure there are responsible lending checks in place – which some, but not all of the BNPL lenders currently do – that could solve some of the problems,” he said at the time.

“I don’t see why BNPL is a special case that is able to stay within a self regulatory mode as opposed to all other credit in Australia. ”

It also comes after eight consecutive months of Australia’s central bank hiking the official cash rate, drastically reducing the borrowing capacity of aspiring homeowners.

Homeowners took yet another hit to their finances just before Christmas with the Reserve Bank of Australia raising interest rates by 0.25 per cent again in December.

In the final decision for 2022, the RBA pushed up rates for the eighth month in a row, after hikes began in May from a record low of 0.1 per cent.

It means the nation’s official cash rate jumped from 2.85 per cent to 3.1 per cent, which lifted the official cash rate to its highest level in 10 years.

– with NCA NewsWire

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