Westpac tightens interest-only lending
Westpac's New Zealand unit is cutting interest-only lending terms to a maximum of five years,
in a market where investors are the driving force.
Interest-only loans are often used by property investors who meet the interest repayments
and leave the principal untouched on the expectation they can pocket a capital gain on the sale of a house.
Westpac has previously allowed terms of up to 15 years but has cut that by two-thirds in the latest response
to a build-up of property investor activity, which now accounts for about 40 per cent of all new lending.
Westpac's New Zealand unit is cutting interest-only lending terms to a maximum of five years,
in a market where investors are the driving force.
Interest-only loans are often used by property investors who meet the interest repayments
and leave the principal untouched on the expectation they can pocket a capital gain on the sale of a house.
Westpac has previously allowed terms of up to 15 years but has cut that by two-thirds in the latest response
to a build-up of property investor activity, which now accounts for about 40 per cent of all new lending.
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