Major bank announces tighter home loan rules

by Julia Corderoy22 Jun 2015
Commonwealth Bank has announced further restrictions to credit policies for both owner-occupier and investor loan customers.

In a note sent to mortgage brokers on Friday, the major bank said it will apply a “servicing loading” of 20% to all repayments on existing home loans and lines of credit held by customers, the Australian Financial Review has reported. This means that repayments which were assessed at $1,000 a month will now be assessed at $1,200 a month.

CBA also said it would take a tougher stance when assessing a borrower’s income. It will only accept 80% of income from overtime, bonuses, and investment income when it is assessing owner-occupier and investment loan applications.

In addition, the major bank will not consider tax breaks investors receive from negative gearing when deciding to approve a loan application, on investor loan applications above 90% LVR. 

The maximum LVR for owner-occupier loans has also been reduced to 95%.

“As the nation's largest home loan provider we constantly review and monitor our loan portfolio to ensure we are maintaining prudent lending standards and meeting our customers' financial needs,” the note to brokers said, according to the AFR.

Last month, Australian Broker reported that Commonwealth Bank removed its $1,000 Investment Home Loan Rebate Offer and reduced pricing discounts offered on investor loans in response to APRA’s fears about an over-heated property market and risky lending standards.
 

COMMENTS

  • by Pete 22/06/2015 8:58:45 AM

    When 65% of their lending book in for Investor Loans you can understand their need for this sort of move. APRA crack down further on Investor lending it's going to be CBA & Westpac that are going to be the 2 under the most pressure.

  • by Regional Broker 22/06/2015 8:58:58 AM

    Can I suggest these restrictions are at the call of their LMI underwriter.

  • by Government sabotage 22/06/2015 9:13:16 AM

    Well, this is it... Our government seems intent to sabotage our economy at every step. Commonwealth are reacting to criticism from apra, a government department which has too much time in its hands and too much power. Congratulations fools, your about to stamp out nationally the recovery in the housing market. Yet another achievement in wiping out any sign of economic growth in our economy. No wonder consumer confidence is so low, our country is being run by doomsayers!!