The Australian Prudential Regulation Authority (APRA) initiated greater scrutiny over lending rules which restricted interest-only loans to 30% of new residential home loans (currently representing around 40%). The increased scrutiny is in response to an environment of:

• high housing prices,
• rising household debt,
• subdued wage growth, and
• historically low interest rates.

The big four banks have since increased interest-only rates and decreased principal and interest rates to encourage customers to pay down their debts sooner and subsequently reduce risk exposures.

Read the full APRA announcement here.

As the interest rate difference between interest-only and principal and interest loans increases, it is important to consider different scenarios for your loan repayments.

Speak to Lauren Chan, Home Loan Adviser, to explore the best repayment scenario for your new and existing loans.

This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances.