Interest-only loans come under the spotlight
Across the ditch, the high level of interest-only lending for residential mortgages has been making waves in recent weeks.
At nearly 40% of total bank mortgage lending, the Australian Prudential Regulation Authority (APRA) has taken decisive action to combat the potential risk.
APRA has now instructed the banks to limit the flow of new interest-only lending to 30% of total new residential mortgage lending.
Additionally, the Australian Securities and Investments Commission (ASIC) has announced targeted industry surveillance to see if lenders and mortgage brokers are “inappropriately recommending more expensive interest-only loans”.
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