Powered by MOMENTUM MEDIA
SUBSCRIBE TO OUR NEWSLETTER SIGN UP
Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Non-major bank changes IO credit policy

aus wide bank  aus wide bank
Reporter 1 minute read

A non-major lender has announced that it is implementing a policy change for new and existing interest-only investment loans.

Auswide Bank says the new maximum loan-to-value ratio (LVR) on new and existing interest-only (IO) lending is now restricted to 80 per cent.

The change applies to all IO investment loans submitted after yesterday (8 June). However, any IO investment application submitted before this date “will need to be formally approved by Tuesday 20th June”.

The move is the latest in a succession of credit policy changes made by lenders since the Australian Prudential Regulation Authority told banks to limit the flow of new interest-only lending to 30 per cent and “place strict internal limits on the volume of interest-only lending at loan-to-value ratios above 80 per cent”.

Further to this, banks were advised to ensure that there is “scrutiny and justification of any instances of interest-only lending at an LVR above 90 per cent”.

Auswide Bank said it is “committed to meeting [its] regulatory requirements, and ensuring [it is] lending responsibly and in the best interests of our customers. Accordingly, [it is] implementing a policy change for investment lending interest-only applications.”

However, the bank said short-term IO periods of up to six months for building and construction loans will not be impacted.

[Related: Brokers slam APRA’s ‘sledgehammer’ approach to IO loans]

Non-major bank changes IO credit policy
aus wide bank
TheAdviser logo
aus wide bank

 

more from the adviser
ASIC TA ASIC defends higher industry levies

The financial services regulator has responded to concerns that...

Marc Vujnovich AMFIn Amfin welcomes new COO

The asset finance brokerage has appointed a former BOQ COO and tr...

digitla markting Advertising costs rising with mortgage competition

The cost of keywords advertising for mortgages is rising as the ...

FROM THE WEB