Change of loan purpose

So my friend recently got a letter from the bank out of the blue.

"we're changing your loan purpose to investment. We need to do this to meet our reporting obligations to Australian Prudential Regulation Authority (APRA). This won't change your interest rate or product you hold with us. If you want to change your interest rate or product, or you believe the change we're making is incorrect, please contact us straight away."

Interesting that it mentions it wont change the interest rate or product?? i would have thought rate would go up if they change it in Inv? Why would someone even bother to tell them the change is incorrect if the rates are the same?

Anyone else seen these lately?

 

Lenders have an obligation to report to APRA the proportions of various types of loans.

When lender and product is it? They may not be able to change the rate or product (for example if it's fixed), but they still have to include it in their reporting figures.

 

Never seen it but what's the issue? It might be that it's a fixed rate product hence no change to rate or product?

 

Back approx 6 years ago the banks were taken to task by APRA when they admitted they had little idea on which loans were which. Now they try and keep it updated. Its still never 100% perfect. Maybe expect a rate change to INV margins next time rates move . The letter doesnt promise it will never move. Classic bank letter. That said there are OO rates on INV use - what is the security ? The letter refers to loan USE. They can be different.

 

Like what Terry noted.

Is it currently a fixed rate ?

 

Out of curiosity, what bank was it?

 

AMP fixed

 

Interesting. So fixing for as long as possible when you upgrade your home seems like a legitimate loophole to get owner occupier rates on an IP

 

Keep an eye on the rate when it reverts to variable and see if owner occ or investment has been applied.

Cheers

Jamie

 

It will revert to Investment Variable at the end of the fixed rate period then.