CANBERRA: AMP Bank will stop writing new loans to property investors and is jacking up interest rates for existing investor customers sharply – the most dramatic bank response so far to a clampdown on lending to landlords.
AMP on Wednesday said it would increase variable interest rates for all its investor borrowers by a hefty 0.47 percentage points, significantly more than recent rate rises from its larger rivals. The rise will increase the rate on a “basic” loan to 4.97 per cent.
More drastically, AMP will also cease accepting or assessing new loans for property investors from now on. It expects the freeze on new lending to continue until later this year, “depending on market conditions”.
Both moves are in response to the Australian Prudential Regulation Authority’s requirement that housing investor loan growth not exceed 10 per cent, AMP said.
“We appreciate the position this puts our customers in, and will be working with our distribution network to actively communicate with them,” AMP Bank managing director Michael Lawrence said in a statement.
A spokesman said the move to cease new lending to investors was an “interim measure in response to regulator guidelines to limit growth in investor property lending across the market to 10 per cent”.
The rate rise will also make AMP’s loan book more profitable – with the bank’s earnings accounting for about 10 per cent of total group profits.
