Powered by MOMENTUM MEDIA
the adviser logo
Lender

Non-major bank changes IO credit policy

by Reporter1 minute read
Auswide Bank

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]

aus wide bank

JOIN THE DISCUSSION

You need to be a member to post comments. Register for free today

MORE FROM THE ADVISER

Stephen Hale ta

MFAA launches near-prime, specialist loan resource

Coined Finance for when your customer doesn’t fit the mould: A broker’s guide to near-prime and...

READ MORE
Daniel Newell Gedda

Specialist lender LoanU rebrands to Gedda

The personal and auto loan provider LoanU, which specialises in helping Australians with impaired credit histories...

READ MORE
tech tools

CBA introduces AI technology to combat scams

New figures released by the competition watchdog this week have revealed that Australians lost more than $2 billion...

READ MORE
magazine
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more