BANKS are denying funds to homeowners looking to upgrade and move into a bigger home.

The hardline stance is curtailing Sydney’s already lacklustre property market by delaying home purchases and forcing homeowners to sell their homes before buying a new one.

Industry experts said lenders were increasingly blocking homeowners from bridging finance – intermediate loans that finance the purchase of a new property while existing property is sold.

Previously a common strategy for people selling one home and buying another, banks now claim bridging finance can produce bad debt while other lenders do not even offer the product. “These loans are now very hard to get, basically because it is just not worth it for the banks,” a mortgage industry expert said.

“Effectively it becomes like a second mortgage on the first property and banks just don’t like increasing the amount of money they lend because they have no security to attach that extra money to.

Source:  News.com.au

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