Direct is the latest lender to announce changes to its lending policy in the wake of APRA’s crackdown on investor lending.
According to communication sent to mortgage brokers obtained by Australian Broker
, the maximum LVR (including LMI premium) for investment loan applications in New South Wales has been reduced to 80%.
New South Wales accounts for the majority of investor interest, currently holding 46% of all investor mortgage commitments, according to research by CoreLogic
RP Data. In fact, the value of commitments in NSW is greater than the value of all states and territories combined, except for WA.
Outside of NSW, the maximum LVR for investor loans will be 90%. For owner occupier loans nationally, the maximum LVR has been re-set to 95%. All changes to maximum LVRs will be effective for loan applications received from Wednesday 10 June 2015.
The non-major also announced interest rate increases on the Mortgage Simplifier and Orange Advantage products for investment loan applications with an LVR above 80%, received from 10 June 2015.
For Orange Advantage investment loans above 80%, the increased interest rate will be 4.84% (comparison rate 5.03%). For Mortgage Simplifier investment loans above 80%, the new rate will be 4.72% (comparison rate 4.73%). This compares to owner occupier rates (above 80% LVR) of 4.44% for both products.