National Australia Bank (NAB) will demand heftier deposits from customers taking out interest-only home loans beginning this June.

The bank recently issued a memo to mortgage brokers, announcing it will cut loan-to-value ratios on interest-only loans for owner-occupiers and investors. Both groups of borrowers will now be subject to loan-to-value ratios of 80%, which means they’ll have to fork out deposits of at least 20%.

Owner-occupiers could previously receive loans for up to 95% of the property value; the ratio was 90% for investors.

The changes are the latest from a major bank after the Australian Prudential Regulation Authority (APRA) announced tougher restrictions on interest-only mortgage lending in an attempt to reduce risks in Sydney and Melbourne’s overheated property markets.

APRA announced towards the end of March that banks would have to limit their higher-risk interest-only loans to 30% of all new residential mortgages, down from about 40% at that time.

NAB is also slashing loan-to-value ratios for construction lending, from 95% to 90%. All changes will take effect June 10.

While the Melbourne-based bank would not comment on the changes, it said in a memo that it was “making changes to some of its policies regarding interest-only home loans to ensure we continue to meet our regulatory requirements and responsible lending obligations.”