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Brokers wishing to place customers into an interest-only mortgage with NAB will be required to collect and provide further information as to why they are opting for such a loan.
From Saturday, 12 August 2017, brokers will be required to ask customers for more information about why they want to choose an interest-only (IO) home loan, and for that information to be included in the NAB mortgage application.
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The bank has also said that the current list of reasons for why a customer is choosing an IO loan will be expanded "to make it more comprehensive", aligning it with the current form already used in the proprietary channel.
For example, some of the reasons that customers may choose to take out an IO mortgage may be that they intend to convert the property from owner-occupied to investment in the future; they want the loan for construction purposes; or they have an investment strategy that requires cash flow for other assets.
The changes have been made to ensure that customers are taking out IO loans in "the right circumstances" and that the loan is "not unsuitable for their needs".
It follows on from guidance provided by Australian Prudential Regulation Authority (APRA) to lenders, asking them to do more to continue their focus on managing interest-only lending.
Speaking of the upcoming change, NAB general manager for home lending Meg Bonighton said: "We are always looking for ways to strengthen our processes and policies so we continue to lend responsibly and better support our customers on their home ownership journey.
"This change will ensure that customers who apply for a NAB home loan through a broker will have a more detailed conversation about their home lending needs, and whether interest-only repayment arrangements are not unsuitable for their circumstances.
"We’ve made a range of changes in recent months to ensure customers are taking out interest-only lending in the right circumstances. This is a continuation of that work."
[Related: Major bank implements Sedgwick remuneration reforms]
