Australia’s largest mortgage lender has explained its position on investor home loan rates following mainstream media reports the bank had cut its rates and sparked a mortgage war.
A CBA spokesperson told Mortgage Business the bank has not reduced its investor home loan rates and no changes have been made to its standard variable rate.
However, CBA recently made administrative changes to one of its products, the CBA Extra Home Loan.
“The changes we have made to the interest rate and minimum balance to one of our mortgage products, Extra Home Loan, is designed to bring it in line with similar home loan products in the market,” the spokesperson said.
“It does not represent a loosening of assessment criteria for any of our home loans for investors or owner-occupiers.
“Commonwealth Bank constantly reviews and monitors its suite of home loan products and services to ensure we are maintaining our prudent lending standards and meeting our customers’ financial needs.”
The response from CBA came after The Australian Financial Review published a news story on Thursday under the headline ‘CBA to cut interest rates to lure property investors’.
The article stated that CBA was “planning to cut investment property interest rates and slash minimum loans on some mortgage products by more than 90 per cent, triggering claims by rivals of a piece war between property investment lenders.”
“CBA, which accounts for one in four property loans, is cutting rates on its ‘extra home loan’ and ‘extra investment home loan’ products by more than 40 basis points to 4.24 per cent and 4.51 respectively. The bank’s standard variable rate is 5.35 per cent,” the AFR reported.
However, Mortgage Business understands that the bank’s Extra Home Loan accounts for a very small percentage of CBA’s total mortgage flows.
The bank has simplified the product by giving it one headline rate and reducing the minimum loan size.
The changes were implemented on Monday.
CBA saw a significant increase in its share of broker-originated investor loans earlier in the year. According to the latest AFG Competition Index, the bank took 25.4 per cent of all broker-originated loans for property investment in February, up from 20.4 per cent in January and 17.7 per cent in December 2015.
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