Commonwealth Bank is expected to announce significant interest rate cuts, as well as slashing minimum loans on some mortgage products by more than 90%, as a part of a fierce price war between lenders.
According to a report in the
Australian Financial Review (
AFR), this comes as more than 160 home loan products – both owner-occupied and investor – have fallen below 4%.
CBA, which accounts for a quarter of the home loan market, is cutting rates on its Extra Home Loan and Extra Investment Home Loan products by more than 40 basis points to 4.24% and 4.51% respectively, according to the
AFR. The bank's standard variable rate is 5.35%.
It is also cutting the minimum loan amount on its top-up Extra Home Loan product – which is aimed at retaining borrowers planning building or renovations – from $150,000 to $10,000, the
AFR has reported.
It is expected CBA will make these announcements next Monday.
A spokesperson for CBA downplayed claims the bank was reacting to a significant slowdown in investment lending, after APRA announced a 10% annual limit on this type of lending at the end of 2014.
The spokesperson told the
AFR it was bringing the products into line with other offerings.
“The changes we have made to the interest rate and minimum balance to one of our mortgage products, Extra Home Loan, is designed to bring it in line with similar home loans in the market. It does not represent a loosening of assessment criteria for any of our home loans for investors or owner-occupiers.”
According to APRA’s latest banking figures, investment loans settled by CBA slowed to just 2% in the year ending April 2016.
