The major bank has revised its investor lending policy, increasing the maximum LVR for interest-only loans.
Westpac Group, which includes its subsidiaries Bank of Melbourne, BankSA and St.George Bank, has informed brokers that it will be lifting the maximum loan-to-value ratio (LVR) for investor loans with interest-only (IO) terms from 80 per cent to 90 per cent (including for any capitalised mortgage insurance premium).
The changes are effective from 21 October and will apply to:
- new purchases;
- refinances both within Westpac Group or externally; and
- loan variations (i.e. switching from principal and interest repayments to IO).
The maximum LVR for owner-occupied loans will remain at 80 per cent.
Commenting on the changes, Will Ranken, Westpac general manager home ownership, told The Adviser: "Providing the support and finance to help buyers purchase their next investment property is a key focus of our lending strategy.
"We believe this change will provide a competitive proposition for investors looking to purchase their next property."
Westpac Group’s investor lending changes come amid new data from the Australian Finance Group (AFG), which revealed that the major banks’ share of the investor space fell sharply over the September quarter of 2019.
In the three months to 30 September, the share of investor lodgements to the big four banks slipped from 56.2 per cent to 50.2 per cent.
When compared to the same quarter in 2018, the major banks’ investor share is down from 57.1 per cent.
This coincided with a sharp drop in their share of interest-only lodgements, from 55.4 per cent in the three months to 30 June, to 47.8 per cent in the three months to 30 December.
When compared to the same quarter in 2018, interest-only lodgements to the major banks are down from 57.8 per cent.
In addition to changes to its maximum LVR for investor IO borrowers, Westpac has announced that effective 21 October, referral to credit assessors will no longer be required in instances where expenses are greater than 130 per cent of the Household Expenditure Measure and no other reason that requires credit assessment is triggered.
Westpac stated that such changes are designed to improve turnaround times.