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Comm Bank pulls out of refinancing investment home loans

14 February 2017

Comm Bank pulls out of refinancing investment home loans

Commonwealth Bank the biggest property lender in Australia, has announced a significant decision which will see it withdrawing from offering any new refinancing applications from investors from Monday 13th February.  

Comm Bank, which accounts for 25% of the nation's loans, has sent a confidential memo to mortgage brokers confirming these changes. It is believed those with an existing CBA mortgage product will still be able to refinance. Those wanting to switch from another lender will be refused.

The memo sent to mortgage brokers confirmed that Comm Bank was “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.

This move from Comm Bank follows yesterday’s announcement from Comm Banks subsidiary Bank West that it would not accept any new applications from applicants who planned to refinance investment property loans from other lenders.

New investment loans account for about 35% of Comm Banks lending book and 33% of new mortgages, according to the bank. The banks lending book does not identify how many investment loans are transferred from other lenders. Comm Bank is the second-largest lender to property investors behind Westpac, according to figures from the banking regulator.

As a knock on effect of this announcement it is anticipated that smaller lenders will receive a flood of investor loan applications, causing other lenders worried about breaching speed limits to also cut back lending.

According to the latest government analysis, December's investment loans grew at 0.8 per cent, twice as fast as owner occupied loans and accounted for about 36 per cent of all loans for investment purposes.

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