CBA Now Increasing Rates

Commonwealth Bank has today announced an increase in interest rates for Investor Variable Interest Only Home Loans and Viridian Line of Credit Loans.

As the nation’s largest lender, Commonwealth Bank is committed to meeting its regulatory requirements, while ensuring it can provide for the long term sustainability of the Australian housing market. We have today announced the following changes:

► Interest only variable interest rates for new and existing Investment Home Loans will increase by 12 basis points.
► Viridian Line of Credit (VLOC) interest rates will increase by 4 basis points for new and existing customers
► These changes will be effective from 3 April 2017

We encourage customers who believe interest only repayments may no longer meet their needs to avoid this rate increase and switch to principal and interest repayments, which they can do online or by completing a switching request form, at no cost.

 

CBA have just announced "
record half-year profit of $4.9b"

Commonwealth Bank posts record half-year profit of $4.9b, hikes rates for property investors

 

So is PPOR IO rates staying the same then?

 

An additional interest of $1,200/ year for each million of investment loan.

Or $756/ year ($63/ month) at 37% tax bracket and $660/ year ($55/ month) at 45%.

Used to get ecstatic whenever they dropped my rates and worried when it went up. Not anymore.... maybe if it was a 2% increase

 

No indication that owner occ loans will be changed

 

Total dividend/distribution payment amount per +security (in primary currency) for all dividends/distributions notified in this form AUD 1.99000000

 

Cue the "nothing to see here" posts....

 

The divide will continue to increase between owner occupied and investment loans - with likely subsets of division of interest only and principal and interest loans for both owner occupiers and investors. CBA is a bit late to the party in segmentation like this but it will certainly happen.

 

I tried to change the repayment option following the announcement by CBA

Please read the following message

• We’re sorry, you’re unable to change your repayment amount online. Please call us on 13 2224, 8am – 8pm, 7 days a week, to discuss your options.

So damn annoying !!!!!!

 

This is an opportunity for them to upsell you something as well.

 

Does anyone remember the 'old days' when investment loan rates were 1% higher than the owner occupied rates?

 

Loan fixed, guarantor or multiple securities?

 

are PPOR and Investor bundled IO affected?

 

I imagine that if it's Titled an 'investment loan' in the account summary, the IO rate will increase.

 

I really wish someone would start putting pressure on the banks increasing rates independent of the RBA yet smashing records. Reckon Pauline Hanson may drop the muslim agenda and focus on the banks and she will win some votes. My loans are with CBA so it impacts me and many clients who we financed with CBA over the last 12 months.

Cheers Ivan

 

Unless the bank loses money, wouldn't it be a record profit each year? Assume most businesses would want to grow each year.

 

It is not a fixed loan nor guarantor.
I am not sure what u mean by multiple securities

 

If you want to put pressure on the banks, write your loans at non banks. Competition is the great equaliser. When brokers abandoned everyone but the Big 4 after the GFC, out of ignorance, the rot started.

Let's be honest @Redwood. The banks have done this multiple times since the GFC, and all things being equal they have been rewarded with ever more business, each time.

I worked as a BDM at Firstmac for years, and brokers just wouldn't support us ( or anyone else not called ANZ, NAB, WBC or CBA) after the GFC. We had better servicing and cheaper rates, and they just flat out abandoned everyone but the Big 4. Major Banks got 85% of all loans for 3 years after the GFC. everyone else - ING, macquarie, bankwest, suncorp, adelaide, MEbank, firstmac...all 40+ other lenders, shared @ 15% .

Let me give you an example ; in early 2009 Firstmac launched a product called Fightback. Standard Variable Rates were @ 5.74% at the time. Most lenders were not offering more than 0.6 or 0.7% discounts for pro packs so best rates available were around 5.1% or thereabouts. The Fightback product was 1 year fixed rate with 100% offset and unlimited extra repayments, priced at 2.99%. It reverted to SVR of 5.74%. The maths? If someone paid 5% into it in year 1 ( same as they'd pay for a pro pack) and then paid standard variable rate for the next 4 years, over a 5 year period the amortised loan balance was significantly lower than the amortised loan balance for a major bank pro pack. In fact, you were ahead for 8 years using this product. The market response? Oh.. it reverts to SVR? Wont touch it. Didnt matter that the bottom line was that the client was better off financially...

And that's what allows the banks to pull this stuff and get away with it. Apathy. Apathy from consumers, and apathy from brokers who are supposed to be advising /recommending loan solutions to consumers.

It doesnt matter what the business is - banking or retail or anything else ... if you vote with your feet, they will at least think twice before gouging you . People have an excuse with retail at least , we have very few alternatives to the big supermarkets. But there have been years of opportunities to take market share from the banks so that they cant behave this way. These opportunities have repeatedly been ignored and it emboldens the banks - they absolutely rely on apathy so they can get away with it. So dont look to Govt to intervene in a free market - just do what a market should do in response to this sort of thing ie take your business elsewhere. Write a lot less loans with these guys and that will get their attention better than any parliamentary talk fest will.
There'd be far less gouging going on if the banks were scared of the consequences. But they just arent .

An interesting poll for the forums would be, what percentage of your loans are not Big 4? It would illuminate the reasons the banks can do as they please.

 

Im living in my PPOR at the moment which was previously an IP. The initial loans were set up as investment loans, but with splits for other IP. Does this apply to all my loans (one security) , or only the split loan with my PPOR?

 

If CBA think it is an investment loan then it would apply. Just prove to them that you are living in it.