Westpac announced changes to its loan rules, including an increase in the maximum loan-to-value ratio for interest-only loans to investors.
Investors who purchase an interest only loan will now be permitted to borrow up to 90% of the value of their target property, which will reduce their deposit obligation to 10%.
This change will apply to new purchases, refinancings and loan variations.
Borrowers moving from principal to principal may also benefit from the reduced filing requirement. However, borrowers will have to comply with the current transfer policy – they will be able to switch to interest payments only after 12 months of drawdown on loan.
Westpac also announced changes to its calculations of the measure of household expenditure (HEM). Referral to a separate credit assessment will no longer be required in cases where expenditures exceed 130% of capital expenditures.
According to the bank, this change will speed loan approval times.
The Westpac, Bank of Melbourne, St. George and BankSA subsidiaries will also adopt the interest-only loan amendments and the calculation of the HEM calculation.
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