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Big four bank announces IO lending changes

A major bank has revealed that it is changing its maximum LVR for interest-only loans, effective 10 June.

NAB has announced it will require a new maximum LVR on interest-only loans of 80 per cent, and a new maximum LVR on construction loans of 90 per cent.

A NAB spokesperson said the changes will be effective as of Saturday, 10 June 2017.

Referring to APRA’s issuance of new guidance in March requiring a cap on interest-only home loans to 30 per cent of banks’ new mortgage lending, the spokesperson said: “These changes are being made to ensure we meet our regulatory requirements, and continue to lend prudently.”

“NAB is 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,” the spokesperson concluded.

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The changes come after the other big four banks announced adjustments to their interest-only lending.

Just over a week ago, CBA reduced its discounts for new owner-occupied and investment home loans with interest-only payments. Additionally, from Saturday, 10 June, the bank said it will reduce the maximum LVR from 95 per cent to 80 per cent for new owner-occupied, and from 90 per cent to 80 per cent for new investment home loan applications with interest-only payments.

Earlier in the month, ANZ announced that from Monday, 29 May, interest-only availability for both owner-occupier and investment lending will be restricted to maximum 80 per cent LVR for new and increased lending.

Similarly, in a recent update to its brokers, Westpac announced that effective Monday, 15 May, the maximum LVR (inclusive of any capped mortgage insurance premium) for owner-occupied interest-only is 90 per cent. This applies to both new loans and further loans (loan increases and top ups).

[Related: Economists flag IO mortgage risks amid ‘sub-prime’ fears]

 

 

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