Commonwealth Bank of Australia (CBA) announced yesterday it was lifting some of its investor mortgage rates.
CBA is raising rates for interest-only investor loans by 0.12% to 5.68% from April 3. Rates for Viridian line of credit mortgages, which allow customers to use their equity for other investments, rose by 0.04%.
Ian Narev, chief executive officer of CBA, said investor lending remained strong during the first half of the financial year. First-half profits rose by 2.1% to a record $4.9bn, driven by demand from domestic and overseas customers.
CBA acknowledged it was trying to rein in high investor lending growth and stay within the 10% annual increase in the amount banks can lend to property investors, as mandated by APRA. Narev said CBA was taking steps to ensure it does not breach the cap.
“We have not exceeded the 10 per cent benchmark and we are determined not to,” Narev said. “In an environment of strong growth, there are steps we can take to do that and some of it is pricing responses.”
Last week, the Sydney-based bank announced it would start turning away property investor customers from rival banks looking to refinance their loans. In a similar vein, CBA-owned Bankwest said it would be discontinuing property investment lending to new customers.
“One of the steps we'll take is reducing refinancing from other financial institutions because we don't want to come to a point where our own customers are coming to us saying they want to borrow and we say ‘we can't because of the benchmark.’”
Collections: Mortgage News