ANZ has announced changes to its interest only loans in compliance with government efforts to reduce banks’ exposure to this type of asset.
The bank announced that effective May 29, the maximum interest only period will be reduced from 10 years to five years to allow “investment lending to align to the maximum for owner occupier lending.”
According to an announcement on the company website, this new provision will apply to all ANZ home loan and residential investment loan products.
It will also waive the renegotiation fee for customers who want to shift their interest only to principal and interest repayments, applicable to the same above mentioned products.
Meanwhile, the bank will apply a minimum rental or board expense of $375 per month to residential investment loans to borrowers who are not currently occupying their own homes. The fee will be charged to residential investment loan products and equity manager accounts, the bank said in its announcement.
Changes to ANZ’s loan provisions is in keeping with the regulatory initiatives geared towards bringing down banks’ exposure to interest only loans to 30%, according to a report on news.com.au.
The report also said that the bank will “crack down on customers failing to chip into their principal and also hit those with loan to value ratios higher than 80%”
