AMP is placing greater restrictions on some of its investor property lending for the second time in 18 months due to concerns it’s about to break a regulatory limit.

The Sydney-based diversified financial conglomerate is also attempting to cut back on new interest-only applications, citing its “responsibility to protect customers and shareholders from what can be a [higher-risk] mortgage strategy.”

Regulators and the Reserve Bank are increasingly concerned about interest-only loans, as they fear some borrowers might lack a strategy to repay the principal. They’re also worried about many borrowers’ vulnerability to rate rises.

“This is in response to recent changes in consumer behaviour, competitor activity and regulatory obligations,” an AMP bank spokesperson told the Australian Financial Review.

Starting on Feb. 16, AMP will no longer accept new refinance applications for investor property lending.

Variable interest rates on principal and interest investor property loans will increase by 25 basis points for new customers. Meanwhile, new investor property loans will require a loan-to-value ratio of less than 70%, down from 90%. AMP is also increasing variable interest rates for new interest-only borrowers by 30 basis points.

These changes will not impact existing borrowers and there is no change for new owner-occupied principal and interest loans.  

The latest amendments were likely implemented due to concerns that a wave of new loan applications would push AMP over APRA’s 10% lending speed limit, which is calculated on a monthly rolling basis.