iscover 
The major bank said that the changes would make it easier for new investors to enter the market and provide greater flexibility for those pursuing longer-term investment strategies.
Under the updated policy, eligible borrowers can now access investment property loans with a 5 per cent deposit when paying lenders mortgage insurance (LMI), down from the previous 10 per cent requirement.
The up-to-95 per cent loan-to-value ratio (LVR) applies to new and existing investment property loans with principal and interest repayments.
Westpac has also increased the maximum interest-only term on eligible investment property loans from 10 years to 15 years.
The extended interest-only period is available on new and existing investment property loans with LVRs of up to 80 per cent, a move that Westpac said would give eligible borrowers additional flexibility to manage cash flow over a longer period.
Challenging outlook for investors
Westpac’s policy changes come as property investors continue to navigate choppy waters following the federal budget, which saw the government overhaul Australia’s negative gearing and capital gains tax (CGT) policies.
From 1 July 2027, negative gearing will only apply to new-build residential properties, and the 50 per cent CGT discount will be replaced by cost base indexation for assets held for more than 12 months, with a 30 per cent minimum tax on net capital gains. Commercial property will retain its status.
The changes to negative gearing, which will apply to all properties bought after the budget announcement on 12 May, prompted a number of lenders to update their servicing policies.
Following the announcement of the budget, Westpac chief economist Luci Ellis alongside senior economists Matthew Hassan and Mantas Vanagas, predicted that new investor activity will fall 34 per cent in the near term, while total housing market turnover is expected to decline by 20 per cent.
Indeed, broker group Loan Market said it has seen investor loan applications fall by 19 per cent in June compared to the four weeks before the federal budget announcement. Australian Finance Group (AFG) has also seen a drop, albeit smaller, in its June quarter report.
Brokers have also told Broker Daily how the budget could reshape the investor market.
[Related: Upgraders drive record June quarter for AFG]
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