CBA follows Bankwest in pulling investor loans from new customers
Commonwealth Bank has opted to pause new investment lending through brokers.
Commonwealth Bank (CBA) has decided to follow its subsidiary Bankwest in pulling investor loans from sale to new customers from Monday 20 February, the AFR reported today. CBA will, however, still allow for new loans or refinancing for current investor customers. The pause only applies to refinancers from other lenders.
CBA has written a confidential memo it will send to brokers on Monday announcing the pause on new investor business, according to the AFR. This memo gives no exact reason for the change; however, it does refer to the bank's “regulatory obligations”. This could indicate it is on the verge of breaching the 10% lending limit set by the Australian Prudential Regulation Authority (APRA) in December 2014.
Matt Comyn, CBA’s head of retail banking, was quoted by smh.com.au as saying, “Commonwealth Bank has remained below APRA’s 10% investment lending growth threshold since it was announced in December 2014. We remain focused on meeting our regulatory commitments and on ensuring the long-term sustainability of the Australian home loan market.”
This move comes after the bank upped the interest rate on some of its investor loans in December by up to 0.65%.
The AFR noted that CBA’s decision could see a surge of investors flock to smaller lenders in order to get access to lending. This could have a run -on effect seeing other lenders who are governed by APRA forced to pause investor lending, while non-bank lenders may be able to grow their lending books.