Commonwealth Bank tightens criteria for home loan borrowers
Commonwealth Bank will apply stricter measures when assessing if borrowers can service their home loans.
Commonwealth Bank will apply stricter measures when assessing if borrowers can service their home loans.According to the Australian Financial Review, the bank has introduced new rules which will see it raise the interest rate buffers for assessing loans. The new servicing guidelines will see borrowers’ ability to repay their loan assessed at a 7.25% interest rate, 2.25% above the rate currently on offer from the bank.
The changes apply to existing owner-occupiers, investors, and line of credit and business customers, the AFR said. The guidelines will be used both by branch staff and mortgage brokers. According to the AFR, the new serviceability requirements mean Commonwealth Bank will assess borrowers with stricter criteria than that required by the Australian Prudential Regulation Authority (APRA). APRA currently requires a 2% buffer applied to serviceability assessments.
“This is to ensure we maintain our responsible standards,” a Commonwealth Bank spokesman said.
The move is the latest in a series by major banks to tighten lending criteria. Commonwealth Bank has joined Westpac and ANZ in changing its criteria to discourage interest-only borrowing.
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Will existing loan pre-approvals be affected by this change?
Hi Anthony!
Thanks for the comment.
This is only applicable to existing owner-occupier, investment home loan, line of credit and business loan repayments.
You can reach out CommBank for further information on this matter.
Hope this helps.
Cheers,
Jonathan