Australia’s biggest home loan lender, Commonwealth Bank, has scaled back the discounts offered on new home loans as it faces increased funding pressures.
In a memo sent to its propriety and third party channels, the major lender announced it will be reducing discounts by up to 15 basis points on new Mortgage Advantage Packaged Owner Occupied and Investment Home Loan applications.
The bank was steadfast in assuring it was not raising or decreasing its headline rates and that these changes relate to a reduction in discounts on a select number of variable rate home and investment home loan products.
also informed discounts are also being reduced by 8 basis points on its Three-Year Special Rate Saver, Extra Life of Loan and Extra Introductory Rate products for new owner occupied and investment home loan applications.
A CBA spokesperson told Australian Broker
in a statement that the changes were necessary to more stringent capital requirements.
“Commonwealth Bank constantly reviews our suite of home loan products and interest rates to ensure we are maintaining our prudent lending standards and meeting our customers' financial needs.
“For new applications we are reducing discounts on the specials of selected products and packages. These changes are required due to increased funding costs, capital requirements and our continued focus on balancing the needs of customers and shareholders.”
These reduced discount rates apply to new home loan applications for these products from 26 August 2016.
At the same time as CBA announced reduced discounts, Westpac, in a memo sent to mortgage brokers and obtained by Australian Broker
, announced it was introducing a new Flexi First Option Home Loan and Flexi First Investment Property Loan offer for a limited time, to replace the existing Flexi First offers in market.
New principal-and-interest owner-occupied loan applications will receive an 89 basis point introductory discount for the first three years of the loan. This would revert to a 45 basis point discount for the remaining loan term.
New principal-and-interest investment loan applications will receive a 96 basis point introductory discount for the first three years of the loan. This would revert to a 52 basis point discount for the remaining loan term.
Westpac’s new Flexi First Option discounts came into effect Tuesday 23 August.