Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
The Australian Financial Review featured some of our recent research on the problem of refinancing interest only loans (IO). Many IO loan holders simply assume they can roll their loan on the same terms when it comes up for periodic review. Many will get a nasty surprise thanks to now tighter lending standards, and higher … Continue reading “Will Your Interest Only Loan Get Refinanced?”
The SMH reported today on research from UBS suggesting that around one third of interest only mortgage holders are not aware of the fact that the loan will revert, normally at the end of 5 or sometimes 10 years to principal and interest only borrowing. A roll to a further IO period is not guaranteed. … Continue reading “More Warnings On The Sleeping Risks From Interest Only Loans”
The latest APRA Property Exposure Data to September 2017 has been released. The most significant change is in the relative volume of interest only loans now held in the portfolio. First, note that the average loan balance for interest only loans currently stands at $347,000 against the average balance of $264,000. So further confirmation that … Continue reading “Interest Only Loans Decline Significantly To Sep 2017”
Citi has published a 54 page report on the highly topical subject of interest only (IO) loans, and we provided data from our Core Market Model to assist their research. Even after recent regulatory tightening, they highlight that underwriting standards in Australia are still more generous than some other countries. They conclude that there are … Continue reading “More Evidence Of The Risks Of Interest Only Loans”
From Australian Broker. Suncorp has today announced it is introducing new pricing methodology for interest only home lending. Banking & wealth CEO David Carter said the bank currently calculated interest only rates based on the purpose of the loan, but would now also take into account the type of loan repayment. “Currently, our interest only … Continue reading “Suncorp Lifts Interest Only Loan Rates”
CBA changed their mortgage rates for owner occupied and investor mortgage holders from 7th July. This includes a significant hike for interest only. They already tightened serviceability requirements a couple of weeks ago. Principal and Interest Ower Occupied holders get a 3 basis point reduction! All this has, they say, nothing to do with the … Continue reading “CBA Ups Interest Only Mortgage Rates”
From Australian Broker. ING Direct has eliminated interest-only repayments on new applications for its owner occupied fixed rate loans, effective from today (6 June). These fixed rates will still be available for principal & interest owner occupied loans. A number of fixed rate changes have also come into effect from today on ING Direct’s owner … Continue reading “ING Eliminates New Fixed Interest Only Loans”
From Australian Broker. National Australia Bank (NAB) has slashed the loan to valuation ratio (LVR) on its interest only loans as it works to fulfil new regulatory requirements. The changes, effective from 10 June, will set the new maximum LVR for interest only loans at 80%. Previously, this sat at 95% for owner occupiers and … Continue reading “NAB Cuts LVR on Interest Only loans”
The Commonwealth Bank of Australia (CBA) announced changes to interest only transactions for both new owner occupied and investment home loans. It will honour existing applications submitted for assessment by COB Friday 9 June, but the new rules start on Monday 22nd May. This reflects a response to the recent regulatory tightening. This is in … Continue reading “CBA Dials Back Interest Only Loans”
From Australian Broker. 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 … Continue reading “ANZ tightens interest only lending portfolio”