Starting Friday, 1 September, Heritage Bank will no longer accept new applications for investment loans in a bid to stay within the caps imposed by APRA.
In a statement, the bank explained: “Heritage has experienced a sharp increase in the proportion of investment lending in our new approvals. That’s a result both of our attractive pricing structure and the actions of competitors in the marketplace.
“We need to manage our investment lending portfolio carefully to ensure we stay within the caps APRA has placed on growth in investor and interest-only lending.
“As a result, we’ve taken the decision to temporarily stop accepting applications for new investor lending.”
As well as the temporary halt in investment loans, the bank also revealed that it will be permanently changing its Family Guarantee loan packages to be owner-occupier. Investor loans will not be eligible in these packages henceforth.
Heritage has also now changed its loan-to-value ratio (LVR) pricing tiers for two of its home loan products: Discount Variable Loans and Home Advantage Variable Loans.
The changes will see “loans in higher LVR tiers will attract slightly higher interest rates”.
According to the bank, this is to account for "the higher risk associated with the loan”.
Heritage will calculate the LVR based on the total amount funded (i.e., including all financed fees and charges).
It said that loans will now fall into one of the following tiers:
- Less than or equal to 80 per cent
- Greater than 80 per cent, less than or equal to 90 per cent
- Greater than 90 per cent, less than or equal to 95 per cent
The final interest rate payable will be determined by the calculated LVR, as well as the total lending under the package at the time of approval.
Lastly, from Friday, the interest rate for its Bridging Loan will increase to 5.69 per cent.