LVRs drop as CommBank continues to tighten investment lending criteria
The Commonwealth Bank has made further changes to its lending criteria for property investors, this time reducing the maximum Loan-to-Value on investment loans.
CommBank, one of Australia’s largest lenders, announced it was reducing the maximum Loan-to-Value ratio (LVR) to 90% for property investors looking to borrow funds. That means investors will need at least a 10% deposit when shopping for property, whereas they could previously borrow with just a 5% deposit.
Dan Huggins, Executive General Manager Home Buying at CommBank said, “We are constantly reviewing our home loan portfolio. Today’s change will enable us to meet our customers’ needs, while further strengthening our high quality home loan business and ensuring we continue to meet our responsible lending and regulatory obligations.”
RELATED: CommBank and Bankwest tighten refinancing lending for property investors
The LVR reduction is the most recent in a series of changes to the Commonwealth Bank’s investment lending criteria, which has been steadily tightening throughout 2017.
CBA first announced it would cease lending to investors looking to refinance an existing mortgage - a move also made by its subsidiary, Bankwest - and then followed that up with a 12 bp rate increase on investment loans.
The changes are designed to slow investment lending, in order to meet APRA’s 10% investor portfolio growth limit, set out in 2014. It seems that after a prolonged period of low interest rates and a booming property market, banks are now keen to pump the brakes on new lending.
CommBank also said in its statement that it expected the changes to affect only a small percentage of investor loan applications, and that every application was assessed on a case-by-case basis.
The changes are effective from 13 March, 2017 and don’t affect owner-occupiers looking to borrow.
Although CBA is restricting lending, investors looking for a home loan to get into the property market can still find plenty of options with low rates and generous LVR limits. If you’re one of them, check out our home loan search tool to find a mortgage that suits your budget.
* 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.
^See information about the Mozo Experts Choice Home Loan Awards
Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.
While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.