Commonwealth Bank stops investment loans

THE nation's largest lender, Commonwealth Bank, has made a drastic move to put the brakes on investment lending.

In a decision that is set to see many other lenders industry wide follow, the bank announced today it would be stopping the acceptance of any new refinance applications for investor loans from Monday February 13.

It comes just a day after the lender's subsidiary bank, Bankwest, announced it would no longer accept applications from would-be customers who planned to refinance investment property loans from other lenders.

In a notice sent to mortgage brokers, CommBank said they are "committed to consistently delivering the best customer experience for home buyers, upholding the highest level of professional standards, and meeting our responsible lending and regulatory obligations".

"To ensure we continue to meet our commitments, from Monday 13th February we will be suspending the acceptance of new refinance applications for Investment Home Loans, until further notice," it said.

Investment home loans represent 35 per cent of CBA's mortgage lending.

However applications that are not refinances for investor and owner occupier loans will not be impacted.

Home Loan Experts' managing director Otto Dargan said the move was a result of the bank trying to get closer to the regulator's, the Australian Prudential and Regulation Authority's, 10 per cent cap on growth in investment lending.

"If they are too far below it (the 10 per cent cap) then they are losing market share,'' he said.

"If they go over it then APRA will require them to set aside more capital which is very costly for the bank."

He said CBA had "missed the mark" and had to take immediate action to reduce its investment lending.

Other lenders to make tweaks to investor lending in recent months includes AMP, Qudos Bank and Newcastle Permanent.

This week the bank also revealed $23 million would be paid out to customers who received bad advice from staff at the centre of the bank's financial planning scandal.

News Corp Australia

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