now it is CBA's turn

got an email from CBA:

Commonwealth Bank has today announced an increase to Standard Variable Home Loan Interest Rates and Viridian Line of Credit products.

Rising costs and regulatory responsibilities mean we are increasing Home Loan interest rates. We have sought to minimise the impact for the majority of our Home Loan customers who are Australian families trying to pay off their home.

These changes don’t come into effect until 8 May, giving people enough time to seek advice on their current repayments. We encourage customers to switch to principal and interest, where this meets their needs, so that they can continue to enjoy historically low rates.

Customers can switch repayments at no cost, simply and easily online at Netbank or over the phone.

The following changes are effective for new and existing customers from Monday 8 May 2017.


► Principal and Interest (P&I) interest rates for Variable Rate Home Loans will increase by3 basis points for Owner Occupied home loans and 24 basis points for Investment home loans. The new P&I Standard Variable Rate for Owner Occupiers will be 5.25% p.a. and 5.80% p.a. for Investors.
► We will increase Interest Only interest rates for all Variable Rate Owner Occupied home loans by 25 basis points and Investment Home Loans by 26 basis points. The new Interest Only Standard Variable Rate for Owner Occupiers will be 5.47% p.a. and5.94% p.a. for Investors.
► Viridian Line of Credit (VLOC) interest rates will increase by 26 basis points to 6.08% p.a. for both investment and personal purposes.

 

Now we just wait for the 2nd tiers and the non banks, and the story is complete ....until June/July, when they will do this again And then once more before Xmas.....

 

50 points.... bumped into my bdm at a conference the other day and asked him about discounting, he said they were currently at 9.97% investor loan growth, so they are actively trying to avoid business. Perhaps 50 points to their reference rate will help....

 

50 points! That's a bit harsh

 

Didn't CBA have some other announcement of 0.18% increase a few weeks ago (and its due to come inforce in April)?

Is this crap going onto of that?

 

I got the email last month with the rise for interest only loans to entice back to P&I. Now seems P&I going up too. Hmm decisions!

 

Good time to get out of property and keep the cash in the bank. Glad I'm selling down

 

would like to know an answer to the above question as well???

 

Yes this is in addition to that, clearly mentioned. Now my turn to fix rates unfortunately at least for 1 or 2 instead of all properties.

 

Yes they did, and it looks like this will be on top of that.

Personally, I've fixed one of my CBA loans on a property I know I'm not going to sell - and even if I did sell, it looks like break costs wouldn't be an issue the way these rates are going up!

For the CBA customers out there, it's really easy to fix via form which can be emailed.

Current fixed rates are 4.19% for 2 yrs and 4.29% for 3 years under the MAV package.

 

Use Netbank very easy to do online rather than fill form quite cumbersome. Less than 2 mins, all done.

 

This is what I'm really surprised about - they have jacked up their prices so much that they are simply uncompetitive in the interest rate space yet they are working with massive delays so the question is are brokers using them for their policy or are these 1/2 lenders brokers that have always used CBA and will continue to do so?

Either way we won't know but it certainly doesn't add up. I think a lot of brokers (not on PC) need to expand their panel of lenders. There are some excellent 2nd tier lenders with outstanding rates, policies and servicing.

 

50 points looks increasingly as though it will just be the beginning for I/O rates. Its now very clear that our genius treasurer Morrison has been into the regulators to help him with his political problems with housing affordability. Morrison clearly doesnt want to concede his wedge policies on CGT concessions or NG so they arent even on the table as part of any suite of proposed solutions to his now very real political problem. This leaves him entirely reliant on the RBA, APRA and ASIC in arresting the affordability issue that has become his political elephant in the room .... interestingly Turnbull is leaving Morrison to do all the talking on this issue....

When the debate around housing affordability and household debt levels leaves the realm of being just a regulatory issue, and enters the political arena as well, that means one thing - there will be more pressure on I/O borrowers rates. More restrictions on I/O borrowers LVR's. Whatever levers will give the "appearance" of returning the bias towards O/Occ P&I borrowers, and away from investors, for political purposes. You can be sure Morrison has been communicating this to the RBA, who have been communicating it to APRA and ASIC, who have been communicating it to the banks higher powers... or does everyone feel its a coincidence we have seen these rate rises recently, or ASIC dragging Westpac into court over responsible lending breaches?

When you then add in the genuine regulatory concerns about the imbalance of I/O lending, Basel 4 Tier 1 capital ratio requirements to be implemented by 2018 and the additional Basel 4 RMBS requirements to be implemented by 2018 , its difficult to believe 50bpts will be the end of the story. Then add in the increases to the US fed cash rate, and its impact on costs of funds....

The banks will not be willing to lose returns on equity, but will be willing to accommodate the treasurers political needs and the regulators needs, so its absolutely a certainty that the burden will be passed to I/O lending. And it will all be spun as an "incentive" for you and I to move our lending arrangements to P&I .

 

Hi @Shahin_Afarin

@euro73 has just teed up a property for me with Liberty, so I know of their parameters. Can I ask to which other 2nd tier lenders you refer?

Cheers
Greg

 

Does anyone remember John Howard and Peter Costello banging on about interest rates always being higher under Labor and government spending putting upward pressure on rates and blah blah blah...

Those were the days. Such quaint times it seemed. Does someone want to remind Morrison that if the argument was true then then it should be true now? Funny how quickly political parties forget history when the shoe is on the other foot.

Every single intervention into the market by any regulator or government seems to have had the effect of propping up house prices and entrenching status quo. The big banks love the 10% speed limit. Guess why? It's a %! Which means CBA can grow it's book by 10% and not ever be fearful of losing market share.

Do you want to know what I think the silver bullet is to housing affordability?

Maximum 20 year loan terms.

Won't be popular, but I reckon it'll stop chaining the entire population into a lifetime of daily grind to pay off a house they can't afford while their kids are in childcare 12 hours a day and they are stuck in gridlocked Sydney traffic killing themselves on the toxic fumes from 4 million vehicles.

Humanity strives to better than thy neighbour. That's why we need some limit on the competitive instinct, restricting how long into the future you can borrow money without repaying it (thus capping how much you can service in a much harsher way). Otherwise some bright spark will invent a 50 year mortgage to solve housing affordability, and then we see medians of $2.5 million instead of the current $1.25 million.

Sorry, that rant got longer than I thought it would be.

Anyway, I'm off to stickybeak at an expo about a proposed major development in my suburb. Muppets will probably want to flog off tiny shoeboxes for a million each, settling in mid 2019 when predicted doom befalls the east coast.

Lets see how they spin it.

 

There's no silver bullet for housing affordability and that's part of the problem. The government and the public is looking for a solution to fix the problem now. The problem has been decades in the making, it's going to take decades to fix.

20 year loan terms will certainly drop house prices because housing will be less affordable. There's nothing in that statement that makes it easier to own a home, it shifts price and affordability at the same time.

Housing actually isn't unaffordable, at least not all of it. I can show you plenty of houses in this country that are a reasonable multiple of peoples income. The problem is that people don't want to live in regional areas, they want to live in Melbourne or Sydney and furthermore they want to live in the inner suburbs.

I believe the solution is a long term plan to diversify where our population lives and works. 30% of Melbourne's working population doesn't need to work in the few square kilometres called the CBD. There needs to be more incentives for employers to locate to regional locations and incentives for people to want to work there. This means serious infrastructure commitment from the government for a long period of time.

Grants, negative gearing removal, lending restrictions, none of this will work. As a country and as a collection of communities, we need to change our thinking about where we live and work. This could take generations to implement.

 

So we need that high speed rail, linking the major centres and providing more affordable housing...

 

Depends on a number of things but if Ultan (who is a smart cookie) has placed you with Liberty then its most likely due to servicing and if so not many can compete at this level with them.

 

Thanks @Shahin_Afarin , that was my suspicion. And yes, Ultan aka @euro73 is indeed a doyen in these matters.

 

Yep for swizzle but boy does he like talking