ANZ has announced that it will now enable home loan customers to switch to interest-only repayments or extend their terms for up to 12 months without a full serviceability assessment.
The revision, which is effective immediately, follows calls for IO loan relief from policymakers, after the Australian Prudential Regulation Authority (APRA) issued new guidance around serviceability assessments for borrowers amid the COVID-19 crisis.
APRA revealed that while full serviceability assessments would continue to be required for new lending, it would, for the next six months, enable lenders to change existing loan terms for up to 12 months without having to conduct a full assessment.
However, ANZ has stressed that applicants must still provide a payslip or bank statement (no older than 30 days) and will be subject to a credit bureau check to confirm eligibility.
ANZ added that eligible applicants:
- must not be requesting any additional credit
- must not be receiving other COVID-19 assistance
- must be employed and currently receiving income (includes JobKeeper) – any reductions in income must be temporary and in response to COVID-19
- must have settled their current loan at least six months prior
- must not be in arrears
- must not be paying LMI
ANZ told brokers that the changes would provide borrowers affected by the current crisis with an alternative to repayment deferrals.
“This process aims to assist customers who wish to proactively manage their cash flow during this period as an alternative to putting their repayments on hold under ANZ’s COVID-19 Assistance offering,” the bank stated.
As at 24 April, 14 per cent of ANZ’s home loan customers paused repayments for up to six months – equating to approximately $34.5 billion in loans
However, NAB has previously told Mortgage Business that while IO switches are not available for P&I borrowers without a full serviceability assessment, it has been “fast-tracking” IO term extensions for eligible customers since April.
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Charbel Kadib is the news editor on the mortgages titles at Momentum Media.
Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.