ANZ Loosens Investor IO Lending Policy
Source: Mortgage Business
The major bank has announced changes to its credit policy criteria for investor home loans with interest-only terms, less than a month after conceding that its tightening measures were "overly conservative".
ANZ has revealed that effective Monday, 25 March, it will be making the following changes to its residential investor interest-only (IO) lending policy.
Interest-only availability for investment lending will be increased to a maximum 90 per cent loan-to-value (LVR) for new and increased lending.
The maximum interest-only period will be increased to 10 years for investment lending.
ANZ stated that the change follows the removal of the Australian Prudential Regulation Authority's (APRA) cap on investor and interest-only lending growth.
"In response to APRAs responsible lending guidance in 2017, ANZ made a series of policy changes to manage the growth in interest-only and investor lending," the bank noted.
"On recent review, we have made a decision to increase our focus on the investor market.
"The upcoming changes demonstrate our continued appetite in the investor market, whilst ensuring we remain in line with our APRA requirements."
Last month, ANZ CEO Shayne Elliott also acknowledged that credit tightening measures imposed by the lender off the back of scrutiny from the banking royal commission were "overly conservative".
Reflecting on subdued mortgage growth reported by ANZ in its first quarter update for the 2019 financial year, Mr Elliott said: "Consumer sentiment has remained generally subdued with uncertainty around regulation and house prices impacting confidence.
"While we are maintaining our focus on the owner-occupier segment, we acknowledge we may have been overly conservative in our implementation of some policy and process changes."
Mr Elliott went on to say that the bank has taken steps to "prudently increase volumes in the investor space".
The impact of ANZ's credit tightening was reflected in APRA's latest monthly banking statistics.
The APRA data revealed that in January 2019, ANZ was the only major bank to report a decline in both its owner-occupied and investment mortgage portfolio.
ANZ's owner-occupied loan book fell by $300 million, from $179 billion to $178.7 billion, while its investment portfolio declined by $400 million, from $79.7 billion to $79.3 billion.
In total, ANZ mortgage portfolio dropped from $258.7 billion to $258 billion, representing a month-on-month decline of 0.27 of a percentage point.