A big four bank has announced that it is increasing rates on its interest-only mortgages for investors and line of credit, effective from 3 April.
Commonwealth Bank said that interest-only home loan rates for investors will rise by 12 basis points and Viridian Line of Credit (VLOC) products will increase by four basis points. The new interest-only standard variable rate for investors will be 5.68 per cent per annum, while VLOC will move to 5.82 per cent per annum.
It added that existing customers who may want to switch to principal and interest repayments to avoid this increase, can do so online, over the phone or in branch at no cost. However, it announced last week that it would be suspending the acceptance of new refinance applications for investment home loans “until further notice”. APRA’s latest Monthly Banking Statistics show that CBA has the highest rate of growth in its investor home loans, with its portfolio having grown by 7.2 per cent to $137.3 billion over the 12 months to 31 December 2016.
According to the bank the new rates remain "at a competitive level among the major banks".
CBA commented: "As the nation’s largest lender, Commonwealth Bank is committed to meeting its regulatory requirements while ensuring it can provide for the long-term sustainability of the Australian housing market... Our standard variable rate (SVR) for owner-occupiers of 5.22 per cent per annum remains the lowest among the major banks."
The announcement was made in tandem with the release of the bank's half-year ending December 2016, which show that statutory net profit after tax came in at $4.9 billion, up 6 per cent on the same period in 2015.
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