Big bank tightens up on interest-only loans

Westpac has taken more action to tighten mortgage lending standards. Westpac has reduced the maximum interest-only period on owner-occupier home loans from 15 to 10 years.

Interest-only loans are popular with property investors, Interest only loans mean the borrower only repays the interest and not the loan principal.

The banking regulator has told banks and other lenders that it expects them to assess interest-only loan applicants as though they were making principal repayments.

Source: Banking Day