Australia and New Zealand Banking Group (ANZ), one of Australia’s largest banks, is clamping down further on interest-only loans and making it tougher for both owner-occupiers and investors failing to chip in their principal. The clampdown will also hit borrowers with loan-to-value (LVR) ratios higher than 80%.
The 80% LVR means that on a $300,000 property, the borrower will have to stump up a $60,000 deposit.
These latest measures serve as further proof that banks are strictly abiding by the Australian Prudential Regulation Authority’s (APRA) continued measures to put brakes on investor lending.
The changes will impact new applicants and existing customers seeking increased lending, as well as refinances from other financial institutions.
Meanwhile, the maximum interest-only period will be reduced from 10 to five years for investment lending. For owner-occupiers, there is no change and it will remain at five years.
ANZ said that for customers seeking to switch from interest-only to principal and interest repayments, their renegotiation fee will be waived.
The changes to interest-only lending will be effective beginning on 29 May.
Collections: Mortgage News