Bank caps LVRs on landlord loans

An Australian lender has announced new changes to limit investor home loan growth.

Teachers Mutual Bank has announced a “three-pronged approach” to limiting investment home loan growth in response to APRA’s request to ADIs to curb lending in this space.

Teachers Mutual Bank and its new division Unibank, have tightened LVR requirements for investors to 85 per cent prior, capitalising on the applicable lenders mortgage insurance (LMI) premium.

In addition, the bank is removing access to the top interest tier for investors on its 'solutions plus' home loans and increasing servicing requirements, with investment home loan applicants required to demonstrate a surplus of $500 above their ability to service the loan.

“These product and policy changes aim to slow down our investment home loan growth and demonstrate our commitment to meeting APRA’s requirements,” Teachers Mutual Bank CEO Steve James said.

"Although Teachers Mutual Bank’s percentage growth in the first quarter will be boosted as a result of its recent merger with Unicredit, it will focus on organic growth in the immediate future.”

In a statement today the lender said that for the present, members who have applied for an investment home loan, which has not yet been funded will proceed with the current approved structure. If a loan has exceeded its 90-day approval and requires reassessment, the new conditions and structure will be applied.

All previously funded loans will remain in place and unaffected by the changes.

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