Westpac has become the next big four bank to changes its interest only lending policies for both new and existing borrowers.
Effective from 5 June, the bank will reduce the maximum LVR on new and existing interest only lending to 80%. This change will apply to owner occupier and residential investment loans, equity access loans and special borrower packages such as Medico, Industry Specialisation Policy, Sports and Entertainment, and Accounting, Law and Executive Sector loans.
Westpac will also no longer accept new standalone refinance applications for owner occupier interest only home loans from an external provider, effective from 5 June. Internal refinancing for owner occupiers will still be permitted for interest only loans, subject to maximum LVR requirements and customer suitability.
Principal and interest as well as residential investment interest only refinancing will not be affected.
Finally, Westpac will also continue to waive the repayment switch fee for those wishing to move from interest only to principal and interest repayments. Premier Advantage Package customers can switch at any time with no additional costs. For fixed loans however, certain break costs may apply.
“We are committed to meeting our regulatory requirements, and ensuring we are lending responsibly and in the best interests of our customers. We regularly review our polices and processes based on a number of factors such as the impact of regulatory requirements and the economic environment,” the bank wrote in a note to brokers today (30 May).
“These changes will help us continue to meet our regulatory requirements and apply responsible lending practices in assessing a customer's ability to service existing and proposed debts.”
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