ASIC has given an update on its targeted industry surveillance of interest-only home loans. The review, announced in April, covers the extent to which lenders and mortgage brokers are inappropriately recommending more expensive interest-only loans.The first stage of its targeted review involved data collection from 16 home loan providers (including major banks, mid-tier, regional and smaller banks, and some of the larger non-bank lenders). In a statement circulated yesterday, ASIC said this stage has now been completed.The regulator found that Australia's major banks have cut back their interest-only lending by A$4.5 billion over the past year. However, other lenders have partially offset this decline by increasing their share of interest-only lending.The 16 lenders reviewed by ASIC provided $14.3 billion in interest-only loans to owner-occupiers in the June 2017 quarter, down from $19 billion in the September 2015 quarter.ASIC's interest-only lending review has also found: borrowers who used brokers were more likely to obtain an interest-only loan compared to those who went directly to a lender; and borrowers approaching retirement age continue to be provided with a significant number of  interest-only owner-occupier loans.ASIC has now moved into the second stage of its review, and will be reviewing individual loan files from both lenders and mortgage brokers to ensure that lenders are providing interest-only home loans in appropriate circumstances. These lenders and mortgage brokers have been selected based on several criteria, including their relative share of interest-only home lending.Under the responsible lending obligations, lenders and brokers must have a reasonable basis for suggesting that a consumer apply for a particular loan product, and no consumer should be surprised by the type of home loan product that they have obtained.