AMP restricts investment home loan lending and hikes rates

AMP has announced it will no longer be accepting new refinancing investment loans, and has increased rates on investment and interest only home loans, as concerns about meeting APRA lending limits rise.

The limit set by APRA in 2014 means banks aren’t allowed more than 10% annual growth in their investor mortgage numbers, and often means lenders tightening restrictions for investors.

In fact, AMP already put the brakes on investor lending in July 2015 in an attempt to reduce investment portfolio growth and is now doing so again. Effective today, the lender will no longer be accepting applications to refinance stand-alone investment property loans.

The announcement follows moves by the Commonwealth Bank and Bankwest, which also recently announced they would no longer be taking on refinancing investors and raised investment loan rates.

AMP’s recent changes may in part be preemptive action against surging numbers of investors who are looking to refinance and being turned away from CommBank and Bankwest.

“There has been an increased demand for investor property loans since late last year, which escalated since a series of competitors moved to change rates last week,” AMP stated on its website.

“We therefore need to manage our regulatory obligations with regards to investor property lending.”

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Other investors aren’t safe from tightening restrictions either. Variable interest rates on principle and interest investment mortgages have increased by 0.25%, while new interest only loans for both investors and owner-occupiers rose by 0.30%.

The AMP website said the rate increases on interest only loans were “in response to elevated levels of interest-only applications since late 2016” and that its aim was to “ensure we protect both customers and shareholders from exposure to what can be a higher risk mortgage strategy.”

Investors looking to borrow from AMP will also need to factor a larger deposit into their budget, as the maximum Loan-to-Value ratio has now dropped to 70% (including LMI), down from 90%.

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Things are looking grim for investors, with 39 lenders raising interest rates on investor loans recently, despite the RBA’s decision to keep rates steady at 1.50% in its February meeting, so investors need to stay on their toes to make sure they’re getting the best possible deal.

If you’re looking to take out an investment home loan or refinance an existing one, check out Mozo’s home loan search tool to find some of the best offers on the market today.