Low documentation (low doc) home loans are rapidly falling out of favour, according to new research published by leading ratings house Cannex.
The Cannex research has revealed that 27 low doc home loans are no longer available and that a few lenders have actually dropped out of the market in the last six months.
Commenting on the research, Cannex financial analyst Joshua Zenas said some lenders were struggling to maintain viability in a market that was becoming increasingly risky due not only to wholesale funding difficulties but climbing delinquency rates among borrowers.
It said lenders that had dropped out of the low-doc market included Bluestone, Ironbark Mortgage Solutions, Virgin Money and even big banks like Macquarie and HSBC.
“The credit crunch has taken a chunk out of low-doc products available to consumers,” Cannex said. “In January this year, Cannex noted there were 180 loans from 46 lenders, today this has shrunk to 153 low-doc home loans from 38 lenders.”