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Earlier this week, Westpac announced that eligible interest-only (IO) home loan customers could now apply for term extensions of up to 12 months, with borrowers paying principal and interest (P&I) also permitted to switch to IO for the same period of time.
This came amid 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 without having to conduct a full assessment.
The regulator noted that such changes could include conversions from principal and interest (P&I) to IO, or for the extension of an IO loan term for a maximum of 12 months.
At present, Westpac is the only big four bank to facilitate both IO switches and extensions without full serviceability assessments.
However, the Commonwealth Bank of Australia (CBA) has told Mortgage Business that it is considering the move as part of an expansion of its COVID-19 relief package.
“We are currently looking at all options, including allowing customers to either extend their interest-only term or switch from principal and interest repayments to interest-only,” a spokesperson revealed.
CBA noted that it would announce any prospective changes “over the coming weeks”.
NAB ‘fast-tracking’ IO extensions
NAB has 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.
NAB noted that no credit assessments are required for 12-month extensions to IO terms due to expire by 30 September.
“We have a dedicated team to contact customers approaching the end of their interest-only term who work with customers on the right solution, which can include restructuring a loan if required,” a NAB spokesperson said.
ANZ focused on ‘lending responsibly’
Unlike its peers, ANZ has not indicated that it has revised or intends to revise its existing IO policy.
When asked if ANZ would consider adopting similar policy to Westpac, a spokesperson told Mortgage Business: “ANZ is committed to lending responsibly while also supporting customers during the COVID-19 pandemic.
“Customers experiencing any difficulty as a result of COVID-19 can request a repayment deferral on their home loan for up to six months, including investors paying interest-only.
“We have already had more than 105,000 home loan accounts seek this assistance.”
[Related: Westpac expands interest-only offering]