More than 900,000 interest-only home loans approved in 2014-15 will expire from this month, reverting to principal and interest payments, according to an analysis by finder.com.au.
The comparison site found that out of $706 billion worth of new home loans approved in 2014-15, 42 per cent were interest-only ($295 billion), which is reportedly the highest on record in the last decade.
The Australian Prudential Regulation Authority (APRA) subsequently introduced measures to slow down the growth of interest-only loans. The restrictions saw interest-only loan approvals fall by 54.9 per cent, or $74.4 billion, in the 12 months to the end of June 2018, representing 16.2 per cent ($61.2 billion) of new home loan approvals.
APRA subsequently scrapped its “Interest-Only Cap” in December, 2018. However, as credit criteria becomes increasingly stringent in the aftermath of the Hayne royal commission, interest-only borrowers may have difficulty obtaining another loan with similar repayments. Subsequently many borrowers are finding it increasingly difficult to negotiate or refinance their home loans due to tighter lending criteria around income and expenses.
If you are experiencing difficulty with your existing bank or simply wish to see what other banks have to offer, please contact one of our finance specialists. With over 30 years experience and access to over 40 lenders, the team at Daley finance can provide you with the expert advice you seek. Call or email Rob Calmasini at firstname.lastname@example.org or Mick Ward at email@example.com