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SYDNEY, July 29 (Reuters) - AMP Bank, a division of Australia's top listed wealth manager AMP Ltd AMP.AX , said on Wednesday it will stop accepting new applications for investor home loans with immediate effect, following a regulatory push to slow down such lending.
The Australian Prudential (LONDON:PRU) Regulatory Authority (APRA) last week announced tough new capital rules on the mortgage portfolio of banks. That follows its call earlier in the year for banks to keep annual growth in investment home loans to below 10 percent, in an attempt to cool red-hot property prices in Sydney and Melbourne.
For all its existing investor property loans, AMP Bank said it will increase variable interest rates by 47 basis points, from 7 September 2015.
AMP's move follows interest rate increases of 27-29 basis points on investor home loans by Australia's major banks such as Commonwealth Bank CBA.AX and ANZ Banking Group ANZ.AX . ID:nL3N10326K ID:nL3N1041GP
"Australia's property market is experiencing high levels of investor property lending growth and we are supportive of the regulator's intention to slow this growth to appropriate levels," Michael Lawrence, managing director of AMP Bank, said in a statement.
While AMP Bank is the first lender to stop extending new home loans for investors, the bigger banks are unlikely to follow suit because mortgages are a much bigger business for them than for AMP, analysts said. AMP has a less than 1 percent market share of the Australian mortgage market.
More than half of new home loan approvals in Australia are for investment purposes. Loans to investors account for a third of the A$1.5 trillion ($1.15 trillion) home loan market, latest regulatory filings show.