From Monday, the CBA, in conjunction with its Lenders Mortgage Insurer, Genworth Financial, will lower its maximum permissible loan-to-value ratio (LVR) on loan applications where an investment property has been used as a security to 95%, from 97% currently. From the CBA communication to third party brokers:
From Monday 22 April 2013, the Bank’s Lender’s Mortgage Insurance provider, Genworth Financial, and the Bank is making a policy change to the maximum LVR when an investment property is used as security.
The maximum LVR will be 95% (including capitalised LMI/LDP) for all new Home/Investment Home Loans and Top Up applications.
What you need to know
The maximum LVR (including capitalised LMI/LDP) for any new Home/Investment Loan or Top Up where security is fully or partially held over an investment property will be 95%. This also includes loans involving security guarantors who are providing an investment property as security.
Note: There is no change to other LVR’s outlined in security-lending-margins…
Applications submitted before Monday 22 April 2013 (including Home Seeker Loans) will be assessed under current policy of maximum 97% LRV (including capitalised LMI/LDP).
I might be reading too much into it, but perhaps the CBA sees housing risks increasing and is, therefore, seeking to pull back its exposure, particularly to investors, where mortgage demand has been running hot.
What strikes me most about the release is that the CBA’s maximum LVR was 97% to begin with which, on the face of it, seems way beyond prudent levels.