As of today, Bankwest will apply new lending criteria for those seeking investment loans that will require applicants to have a deposit of at least 20 per cent.
Where loans could once be sought with a deposit of just 5 per cent, loan to value ratios will now be required to be at least 80 per cent.
A Bankwest spokesperson said in The Age that the changes had come in “to ensure sustainable growth in the home loan investment sector and to protect both investors and the home loan market”.
“These changes will apply to all new applications, pre-approvals moving to formal approvals and applications being re-assessed for a material change,” the spokesperson said.
The move is a strong indicator that the bank is reacting to a recent increase in pressure from the Australian Regulation Prudential Authority (APRA) which has this year set about cracking down on risky lending due to ongoing low interest rates.
AMP Capital’s Shane Oliver said investors can expect more banks to announce similar measures in the future and Mortgage Choice’s chief executive John Flavell said Bankwest’s decision to cap investor loan to value ratios was not surprising.
“At the end of last year, APRA indicated that it would cap growth on investment lending at 10 per cent for all banks. In recent weeks, we have started to see some lenders react to APRA’s decision and implement fairly blunt measures in a bid to limit their exposure to the investor market,” Mr Flavell said.
“Some lenders have reduced the level of rate discounts they offer to investor borrowers, while Bankwest has reviewed the acceptable loan to value ratio for investment purposes, capping it at 80 per cent.”