CommBank and Bankwest tighten refinancing lending for property investors
Thursday 09 February 2017
Update 15/2/17: CommBank has also increased rates on interest only investment loans by 12 bp and line of credit mortgages by 4 bp, effective as of April 3.
The Commonwealth Bank and its subsidiary, Bankwest, are aiming to slow lending to property investors, by putting a stop to new lending for investors looking to refinance their mortgage.
Analysts say property investors have driven rapid price growth in Sydney and Melbourne recently, but from next Monday, investors looking to save money by switching from another bank to refinance their mortgage will have two less options to choose from.
CommBank and Bankwest have announced that any new lending to refinancing investors will be suspended, although borrowers who already have investment loans will still be able to take out new home loans.
The move, which will cut out around a third of CommBank’s new lending activity, was due to “regulatory commitments,” CBA's group executive for retail banking services, Matt Comyn, told msn.com.
Under APRA’s investor portfolio annual growth limit, set out in 2014, banks aren’t allowed to grow their property investor mortgage numbers quicker than 10% each year.
"Commonwealth Bank has remained below APRA's 10% investment lending growth threshold since it was announced in December 2014. We remain focused on meeting our regulatory commitments and on ensuring the long-term sustainability of the Australian home loan market," Comyn said.
Bankwest spokespeople were singing a similar tune, and were quoted by The Australian as saying, “Bankwest will continue to monitor the impact this change has on customers and the market, in order to maintain prudent lending and a sustainable business.”
It’s not unusual to see big banks cracking down on investors - they usually pay higher interest rates than owner occupiers looking for a home loan, and are subject to much tighter lending criteria. Banks also often change the lending criteria for investors in an effort to stay below the 10% growth figure.
That makes it important for investors to keep an eye on their mortgage rates and make sure they’re getting the best deal. Whether you’re looking for a new loan to invest for the first time, or wanting to refinance your existing mortgage, investors can find some of the best offers on the market using Mozo’s investment home loan search tool.