The Australian and New Zealand banking group (ANZ) announced that it would offer real estate investors a 10-year interest-only loan offer to stimulate activity in an unfavorable economic environment, according to Reuters.
This decision will come into effect on April 25 and the bank will extend the interest-only period – which does not require a return of capital – to real estate investors from five to ten years. In addition, the amount of the loans will be increased to 90% of the value of the property.
"In a recent review, we made the decision to focus more on the investor market. The upcoming changes testify to our continued appetite in the investor market, while ensuring we remain in compliance with the requirements of the APRA, "said ANZ in a statement.
The Australian Prudential Regulatory Authority (APRA) declined to comment on ANZ's recent decision.
In 2018, APRA lifted the strict limits on investor and interest only lending, which were put in place to avoid a housing bubble. This change has resulted in an 8% drop in the value of homes across the country since September 2017.
The regulator also warned that the resurgence of rapid growth of interest-only loans "at the industry level" would raise systemic concerns. As a result, APRA stated that it would keep an eye on the changing lending standards of banks.
"In such a scenario, the APRA would look at the need to implement industry-wide measures," said APRA.
Credit growth in Australia hit a record low of 4.2% in the 12 months to December, as tighter credit conditions and a sharp fall in housing prices dampened demand.
ANZ's housing loans to investors also declined 3.8% to $ 3.2 billion over the period, while overall system growth was 1%.
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