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Big four bank announces investor LVR change

house and money

house and money
Reporter 1 minute read

A major bank has announced that it is reducing the maximum LVR ratio for investment home loans, effective immediately.

Commonwealth Bank of Australia (CBA) has reduced the maximum loan-to-value ratio for investment home loans to 90 per cent, meaning investors should ensure they have a 10 per cent deposit.

This change relates only to investment home loans and is effective immediately. There has been no change for owner-occupier home loans.

The bank has said it expects the change will affect "a very small percentage of the home loan applications" it receives.

Dan Huggins, executive general manager home buying at CBA, added: “We are constantly reviewing our home loan portfolio.

"[This] 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.”

The bank has been changing its investor loans recently, after announcing that it would be increasing interest-only home loan rates for investors by 12 basis points from 3 April.

The new interest-only standard variable rate for investors will be 5.68 per cent per annum. 

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Further, it announced earlier this year 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."

[Related: Broker share for major drops 4% in six months]

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