CommBank eases some restrictions on property investor loan applications

By Roisin Kelly-Goldsmith · · 2 min read
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CommBank has announced that it will begin accepting applications from investors looking to refinance principal and interest loans once again, effectively reversing the suspension the bank placed on these types of borrowers just three months ago.

The major bank notified mortgage brokers about the positive move for investors yesterday, however interest-only loans have been excluded from the changes.

According to Mozo’s property expert, Steve Jovcevski, it’s good news that CBA is opening the doors to some refinancing customers, as the move may encourage other major banks to follow suit.

“Right now we’re seeing a range of home loan providers clamping down on investor lending, especially the big four banks. So CBA’s decision to begin accepting loans from investors looking to refinance, is positive for borrowers who prefer to bank with the majors.”

Jovcevski urged interest only customers to take heart that it's just a matter of time before banks relax their policies again, once the interest only loans on their books fall under the 30% cap.

While some investors may be happy to hear that refinancing to CommBank is an option once again (if they are paying both the principal and interest), the big bank also introduced a range of new loan to value ratio restrictions, which from 10 June will require borrowers to have larger home deposits.

For instance, CBA is planning to reduce its LVR limit for owner-occupiers from 95% to 80% and will be enforcing a lower maximum LVR for investment home loans from 90% to 80%.

“In March, the Australian Prudential Regulation Authority (APRA) announced the introduction of a new measure to limit the flow of new interest-only residential mortgage lending to 30%,” said CommBank.

“Commonwealth Bank is committed to ensuring we meet our customer’s needs while maintaining our prudent lending standards and meeting our regulatory requirements. To help meet these commitments, we are introducing changes that encourage customers to choose principal and interest repayments, where this meets their needs.”

CommBank has made headlines for other reasons this week, as the bank and its competitors Westpac, NAB and ANZ have publicly warned that the upcoming government tax, expected to cost an average of $241 million for each big four bank annually will fall heavily on the shoulders of shareholders and customers.

Best variable rates* for investors ready to refinance:

  • 2. 3.74% (3.80% comparison rate) from Reduce Home Loans
  • 3. 3.74% (3.79% comparison rate) from Homestar
  • 5. 3.89% (4.14% comparison rate) from BCU 
    • *Based on $300k loan amount and 80% LVR

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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