Australia’s largest mortgage provider announced changes to interest-only payments for owner-occupied and investor home loans.
From today, CBA will reduce discounts for new owner-occupied and investment home loans with interest-only payments.
“We are reducing the discounts offered in the Home Loan Pricing Tool (HLPT) for new Home/Investment Home Loans with IO payments,” the bank said in a statement last week.
“If you submit a pricing request for a new home/investment home loan with P&I repayments, and then switch the repayment type to IO before loan funding, the discount will no longer apply.”
CBA is also making changes to its current refinance rebate. The bank explained that, from today, the $1,250 refinance rebate for select applications will only be available for owner-occupied principal and interest home loans via the HLPT. It will no longer be available to owner-occupied home loans where IO payments are selected.
Meanwhile, from Saturday, 10 June, CBA will reduce the maximum LVR from 95 per cent to 80 per cent for new owner-occupied, and from 90 per cent to 80 per cent for new investment home loan applications with IO payments.
However, the bank will honour existing policy applications submitted by close of business Friday, 9 June.
“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 per cent,” CBA said.
“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. We are also increasing our already robust monitoring and reporting activities to ensure that where interest-only payments are selected, they are suitable for customers’ needs.”
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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