What happened
AMP launched a 40-year mortgage titled 'Equity Flex' aimed at property investors, offering up to 10 years of interest-only repayments. AMP becomes the first major Australian bank to enter the 40-year mortgage market, a segment previously limited to niche non-bank lenders. Financial research firm Canstar warned that extended loan terms could significantly increase total interest paid over the life of the loan.
Why it matters here
For Australian property investors, longer mortgage terms offer immediate relief on cash flow by lowering monthly commitments, but drastically increase overall interest liabilities. APRA views long-term lending as inherently risky, meaning broader adoption across major banks remains unlikely. Investors must weigh immediate servicing flexibility against long-term equity accumulation and potential risks if property price growth stalls across major capital cities.
What to watch
Monitor APRA regulatory announcements regarding high-risk lending limits, along with rival bank responses and investor uptake figures for 40-year loan products in Australia.
Source
news.com.au