Mortgage rates no longer track the official rate set by the central bank; borrowers must jump through hoops rather than fend off overzealous lenders; instead of racing to beat rising house prices, prudent buyers must factor in the possibility of stagnant or even falling values. Observers say all lenders are tidying up their credit processes to varying degrees, with the most marked changes coming from smaller lenders, which now have difficulty raising funds on wholesale markets at a reasonable price due to the global credit crunch. Non-bank lenders were the first to feel the impact of the global credit crunch - and to pass on those costs - because they rely on wholesale markets to raise money to fund their lending operations. In contrast, Australian banks use their depositors’ money to finance a large chunk of their lending - about half of lending for the big banks and about a third in the case of regional banks, Dowling says - so they’re not as exposed to rising rates on global credit markets. Resi’s head of consumer advocacy, Lisa Montgomery, says a clean credit profile can mean access to a wider range of loans - potentially at better rates - and quicker approval. The way you’ve managed all your past and present credit arrangements - such as credit cards, mobile phone accounts and retailers’ interest-free packages - will count for a lot. read more

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