Changes for Interest Only Home Loans

Recently, APRA (The Australian Prudential Regulation Authority) made some changes, recommendations and instructions for lenders and banks alike in regards to the ‘Interest Only’ loans that were allowed.

APRA said that, ‘from now on interest-only loans are to be restricted to 30 per cent of new residential mortgage loans’. This will significantly impact those investors wanting to enter the market and those already in the market.

Interest-only lending represents approximately 40 per cent of residential mortgage lending by banks, which APRA said is "quite high" by international and historical standards.

As a knee jerk reaction most lenders have change policy and tightened up their lending portfolio.

Some banks have already implemented changes including but not limited to changes to interest rates, servicing calculators, policy, lending criteria and much more, with some not implements other changes until May or June 2017.

If you are an investor, new home owner or existing home owner looking to purchase again, do not despair as there are always investment loans and products available for you, just ask your Mortgage Broker to discuss what bank and home loan is right for you and how these will impact you and your purchase.

For more information please do not hesitate in contacting my team at [email protected] or calling me on 0430 077 581.