Westpac loosens investor loan restrictions on interest only loans

Westpac is raising the maximum loan-to-valuation ratio (LVR) for interest-only loans to property investors to 90 per cent, from 80 per cent.

This move will allow property investors to take out interest-only loans with smaller deposits.

New interest-only loans to owner-occupiers will remain subject to an LVR cap of 80 per cent.

The bank's general manager of home ownership Will Ranken told Domain that the "change will provide a competitive proposition for investors looking to purchase their next property."

Since APRA removed the cap on the proportion of new interest-only lending Westpac haven't been the only Bank in the Big Four to make a move like this.

Earlier this year ANZ also raised LVR limits for property investors with interest-only loans.

There have also been a series of rate cuts as banks bring their interest rate down in line with the recent cash rate cuts.

Bell Potter analyst TS Lim said banks would try to attract property investors now that property prices had bottomed, but he thought lenders would still be "pretty measured."

"It's an area where the banks are chasing market share. I think it's going to grow, but not as quickly as before. People are still wary," Mr Lim said.