The Commonwealth Bank of Australia is expected to cut investment property interest rates as well as slash minimum loans on some mortgage products by more than 90 per cent in the hopes of luring more property investors. As more than 160 home loan products slipped below the benchmark four per cent, many property buyers are shopping around for the best rates in the market.
“There is a mortgage war out there,” said Martin North, principal of consultancy firm Digital Finance Analytics. “The banks are trying to get smarter in the approach to the market, more selective, targeted discounts, and looking for undiscovered niches. From a financial stability point of view, though, they are repricing more profitable older loans into newer less profitable ones. This cannot go on forever.”
CBA is cutting the rates on its ‘extra home loan’ and ‘extra investment home loan’ products by more than 40 basis points. It is also cutting its minimum loan amount on its top-up ‘extra home loan’ product from $150,000 to $10,000. The changes are expected to be announced on Monday.
According to a bank spokesman, the changes are merely done to bring their products in line with other offerings in the market.
“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 loans in the market,” CBA’s spokesman said. “It does not represent a loosening of assessment criteria for any of our home loans for investors or owner-occupiers.”
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