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The bank has said it is “simplifying” its product suite to ensure that it is “providing a suitable range of products that align with [its] customers’ needs”.
From Saturday, 29 September 2018, the big four bank will remove all low documentation features on new home loans and line of credit applications from both broker and proprietary channels. Should a customer wish to top up an existing home loan or line of credit with the low doc feature, they must provide full financials for all new applications.
All new loans that have a low doc feature, including Home Seeker applications, must reach formal approval by close of business on Friday, 28 September 2018.
The bank has said that brokers who request an amendment to an application with a removed product or a low doc feature that has not yet reached formal approval by Saturday, 29 September 2018, will need to discuss “another product option” with the customer to suit their needs.
Loans must be funded by close of business on Friday, 28 December 2018.
There are no changes for existing customers that have low doc loans.
The move marks a major change in the lending landscape, but in practice, CBA has not provided true “low doc” loans for some time, requiring more documentation than most historical low doc loans required.
Several other banks have already ceased the sale of low doc loans, with NAB ceasing the sale of low doc loans as far back as January 2014.
As well as removing the low doc feature, CBA will also remove several home loan products, including:
- 1 Year Guaranteed Rate
- 7 Year Fixed Rate
- 12 Month Discounted Variable Rate
- Rate Saver
- 3 Year Special Rate Saver
- No Fee Variable Rate
A CBA spokesperson said: “At Commonwealth Bank, we constantly review and monitor our suite of home loan products and services to ensure we are maintaining our prudent lending standards and meeting our customers’ financial needs.
“From September onwards, we will be streamlining our suite of products to deliver our customers a simplified and competitive range of home loan solutions.”
The statement continued: “Whatever our customers’ needs, our network of brokers or home lending specialists can help them find a flexible mortgage and guide them through the entire home buying journey, providing support every step of the way.”
Find out our initial thoughts on the news on the newsflash podcast of Mortgage Business Uncut: