THE nation’s largest bank has reopened the door to investor refinancing just three months after it announced it would no longer accept these types of loan applications.
The Commonwealth Bank move is tipped to increase competition in the mortgage market and deliver investors fiercer deals on their mortgage rates.
In a notice issued to mortgage brokers the banking giant announced the change was effective immediately and investors who do refinance must chip away at their debts and make principal and interest repayments on their loans.
Interest-only will not be accepted.
The move comes just one week after banking rivals ANZ and Westpac announced further tightening to investor loans, including requiring fatter deposits and shorter interest-only periods.
Home Loan Experts’ managing director Otto Dargan said CBA’s decision was another signal banks were juggling a “balancing act between regulatory limits and chasing volumes.”
“For investors it’s great news, the more competition there is in the market then the less likely it is for banks to hike rates for investors,’’ he said.
“We’re already seeing our property investors switching to principal and interest repayments to get better rates from their lenders and fewer home buyers choosing interest-only repayments.”
A CBA spokeswoman said the decision followed the banking regulator, the Australian Prudential and Regulation Authority’s announcement earlier this year for banks to reduce the number of interest-only home loans.
The bank said the latest decision was “aimed at encouraging customers to select principal and interest where appropriate to help them own their homes faster.”
APRA is continuing to force lenders to clamp down on interest-only lending, limiting it to only 30 per cent of all residential lending.
APRA has also warned banks to clampdown on their investor lending.
Investors continue to be stung by higher rates than owner occupiers and for those paying interest-only they are being hit even further with higher charges.
1300homeloan’s director John Kolenda said CBA’s move highlights that the bank wants to see more customers coming through the doors after losing some through the regulatory restrictions.
“The competition will probably see better pricing flow onto those consumers,’’ he said.