A non-major lender has announced that new applications for interest-only repayments on owner-occupied fixed rate loans will no longer be accepted, effective immediately.
ING DIRECT has announced that, as of yesterday (6 June), owner-occupiers wishing to access fixed rate loans will need to request principal and interest repayments.
Changes were also made to some owner-occupied fixed rates. Those on three and five-year fixed rate loans (combined with Orange Advantage) have seen rates drop to 3.79 per cent per annum (p.a.) and 4.19 per cent p.a, respectively (4.48 p.a. and 4.51 p.a. comparison).
Standard owner-occupied three and five-year fixed rates have also been reduced to 3.89 p.a. and 4.29 p.a., respectively (4.51 p.a. and 4.56 p.a. comparison).
However, ING DIRECT increased its three-year investment fixed rate to 4.39 per cent (4.82 p.a. comparison).
Further, the lender revealed that its rates for all owner-occupiers making interest-only (IO) repayments will increase by 0.15 per cent from 23 June 2017.
The changes are the latest announced by a lender to curb IO loans in a bid to remain under the APRA speed limit.
MyState announced earlier this week that it is making changes to its policy regarding owner-occupied IO lending to ensure it "continue[s] to meet [its] regulatory requirements and responsible lending obligations".
It revealed that IO lending will only be available for owner occupied loans with an loan-to-value (LVR) ratio of less than or equal to 80 per cent (previously 90 per cent).
Any existing pipeline will be subject to current lending policy.