AMP Bank, one of the premiere second-tier financial institutions Down Under, has decided to suspend approval for new loans for property investors. According to a report from abc.net.au, the suspension on these loans was in compliance with the limits set by the bank's regulators.
The suspension was conveyed by the Bank through a statement it released today, July 29. The statement read that they would not be accepting new, or assessing existing, property investor loan applications starting today. The banking division projects that the said suspension would continue until later this year.
In another report, this time from smh.com.au, AMP Bank also announced last Wednesday that it would be increasing its variable interest rates. The increase would be at 0.47 percentage points and would affect investor borrower loans. This is the largest jump in rates set by a bank since the clampdown on property investor loan was instituted. Now, with the increase, the basic loan interest rate is set at 4.97 percent.
According to AMP Bank Managing Director Michael Lawrence, "We appreciate the position this puts our customers in, and will be working with our distribution network to actively communicate with them." The bank added that both the suspension on investor borrower loans and the increase in variable interest rates were in compliance with the Australian Prudential Regulation Authority's imposition o a 10 percent ceiling on housing investor loan growth.
Lawrence further added, as reported in sbs.com.au, "Australia's property market is experiencing high levels of investor property lending growth and we are supportive of the regulator's intention to slow this growth to appropriate levels."
Aside from AMP Bank, three other major banks complied with the regulator's edict. These include ANZ Bank, Commonwealth Bank, National Australia Bank, together with Macquarie have all lifted rates for investor loans. Only Westpac retained current investor rates, but it has internal issues as variable interest rates affect owner occupier interest rates.
