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Commonwealth Bank media release

COMMONWEALTH BANK TO MODERATE INVESTOR HOME LOAN GROWTH

  • Standard Variable Rate for investor home loans to increase by 0.27% to 5.72% p.a.
  • Fixed rates for 1,2,3,4 and 5 year investor home loans to increase by between 0.10% to 0.40% p.a.
  • Reductions for fixed rate owner occupied loans of up to 0.30% p.a. introduced this week
  • Regulatory measures require banks to restrict investor home loan growth to 10% p.a.

Commonwealth Bank has today taken further steps to moderate investor home loan growth and to manage its portfolio to address the Australian Prudential Regulation Authority’s concerns regarding investment home lending growth. The interest rate on investor home loans will increase by 27 basis points to 5.72% per annum. Fixed rates for 1,2,3,4 and 5 year new investor home loans will also increase by between 10 and 40 basis points. There are no increases to the SVR on owner occupied loans and fixed rates for some owner occupied loans have been reduced.

Demand for investor home loans across Australia has reached historic highs, with recent data noting that over 50% of new home loan approvals are for investment purposes. Last December, APRA introduced new regulatory measures to reinforce sound residential lending practices, including actions to restrict investor lending growth to no more than 10% p.a.

Matt Comyn, Group Executive for Retail Banking Services said: “As Australia’s largest home lender, we support the prudential regulator’s actions to ensure lending practices remain sustainable and we have been actively managing our investment home loan portfolio to remain below the 10% growth limit.

"Despite making a range of changes to our investor lending policies in the past few months we have witnessed ongoing investor lending growth, and at an industry level, investor lending approvals remain 22% higher than 12 months ago."

Commonwealth Bank has moved to ensure it remains competitive for owner occupied loans and we have reduced rates on our 1,2,3, and 4 year fixed rate loans by up to 30 basis points (see table below). These fixed rate changes came into effect this week (22 July 2015).

"In the current market conditions, we believe these changes strike an appropriate balance in our portfolio between owner occupied home loans and those seeking investment loans," Mr Comyn said.

Fixed rate loans for investors will increase by between 0.10% and 0.40% (see table below). This will apply to new loans only and will come into effect from 31 July 2015.

The new investment home loan rate of 5.72% remains one of the lowest rates offered by CBA and is 0.18% lower than the rate six months ago. It will apply to new and existing customers and will come into effect from 10 August 2015.

Current Rate

New Rate

Change

1-year

4.64%

4.94%

+0.30%

2-year

4.64%

5.04%

+0.40%

3-year

4.64%

5.04%

+0.40%

4-year

4.84%

5.14%

+0.30%

5-year

4.94%

5.04%

+0.10%

0.15% discount available within Wealth Package

Previous Rate

Current Rate

Change

1-year

4.84%

4.64%

-0.20%

2-year

4.74%

4.64%

-0.10%

3-year

4.84%

4.64%

-0.20%

4-year

5.14%

4.84%

-0.30%

5-year

4.74%

4.94%

+0.20%

Commonwealth Bank media contact:

Tracy Lee
Ph: +61 2 9118 6919
media@cba.com.au