CBA to indefinitely stop some property investor loans
The Commonwealth Bank of Australia (CBA), the nation's biggest property lender, has announced it will indefinitely suspend new finance applications for some investment home loans.
The CBA, which accounts for one in four of the nation's loans also announced they have reduced the discounts for some mortgage products and that refinance rebates are no longer available for investment home loans
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 bank has not provided a reason for the decision but refers to its "regulatory obligations", which suggests it could be pulling back on lending because of concerns about breaching regulatory speed limit growth, which might surprise many analysts that claimed it was comfortably within the limit.
It is suspected the bank might be close to the Australian Prudential Regulation Authority's 10 per cent lending speed limit, which is calculated on a monthly rolling basis. The bank has never exceeded the cap.
New investment loans account for about 35 per cent of its lending book and 33 per cent of new mortgage business, according to the bank. The bank loan book does not identify how many investment loans are transferred from other lenders.
The move could result in smaller lenders receiving a flood of investor loan applications, causing other lenders worried about breaching speed limits to also cut back lending.
Details about the length of the suspension - or what happens to loan applications between now and next Monday - are not available.
Loan transfer applications between today and next Monday are expected to be reviewed on a case-by-case basis.
The announcement comes less than 24 hours after its subsidiary, BankWest, announced that it was also toughening lending conditions for investment loans after details were revealed by The Australian Financial Review.
CBA's half-year results on February 15 could provide more insights into group lending volumes.
About 1.5 million Australian households have an investment property and the number of investment loans is rapidly increasing, particularly in Melbourne and Sydney.
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.
Last month the bank announced rates rises of up to 15 basis points for investor loans. It also closed a popular loophole used by property investors to switch from principal and interest loans to interest-only, which require lower monthly repayments because principal payments are deferred.
Matt Comyn, chief executive for retail banking, flagged concerns about rising wholesale funding costs and the need to remain below the 10 per cent speed limit