Australia's ANZ to give longer interest-only loans to revive property investor business
By Paulina Duran
SYDNEY, March 15 (Reuters) - Australia and New Zealand
Banking Group will offer interest-only loans for up to
10 years to property investors, as it tries to fuel business
amid softening economic conditions.
From April 25, Australia's third largest lender will extend
the period of interest-only loans - which do not require
principal repayments - to property investors by 5 years to a
decade, and will increase the size of the loans to up to 90
percent of the property's value, the bank told clients in a memo
seen by Reuters.
Australia's four largest lenders, including ANZ, National
Australia Bank, and their largest peers, Commonwealth
Bank of Australia and Westpac Banking Corp,
control about 80 percent of the country's mortgage market, their
largest contribution to profit.
They are still amongst the worlds' most profitable, but as
lending growth hits record lows amid the softening of its
once-booming property maket, the banks are beginning to mobilise
to try to retain profitability.
"On recent review, we have made a decision to increase our
focus on the investor market," according to the ANZ memo. "The
upcoming changes demonstrate our continued appetite in the
investor market, whilst ensuring we remain in line with our APRA
A spokesman for the Australian Prudential Regulation
Authority (APRA) declined to comment.
The regulator last year lifted strict caps on investor and
interest-only lending that had been put in place to avoid a
property bubble, contributing to a 8 percent decline in home
values across the country since September 2017.
At the time, it said it would monitor changes in lending
standards by the banks and that the re-emergence of rapid growth
in interest-only lending "at an industry-wide level" would raise
"In such a scenario, APRA would consider the need to apply
industry-wide measures in response," the regulator said.
Credit growth in Australia fell to a record low of 4.2
percent in the 12 months to December, as lending tightening by
banks and a sharp fall in housing prices turned off demand.
Home lending to investors by ANZ shrunk 3.8 percent - or
A$3.2 billion ($2.27 billion) - over the period, while overall
growth in the system was 1 percent.
($1 = 1.4122 Australian dollars)
(Reporting by Paulina Duran; Editing by Rashmi Aich)
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