Westpac Bank announced today the maximum LVR (loan to valuation ratio) for those seeking interest only repayments will be capped at 80%. This applies to both owner occupied and investment lending. They are last of the Major 4 Banks to cap LVRs for this repayment type all of which introduced restricted LVR policy over the past 4 weeks.

Penalties will apply to ADTI’s where greater than 30% of new business introduced features interest only repayment hence restrictions being introduced.

Those particularly at risk are investors purchasing off plan (with non-deductible home loan debt) – in particular those who have bought inner city apartments where valuation outcomes are generally lower than purchase price.

Borrowers need to be informed of lending policy changes and anyone seeking to purchase property must arm themselves with a trusted finance broker.