The Commonwealth Bank of Australia (CBA) has announced a series of changes to its mortgage serviceability criteria and reporting standards.
From 10 June, the bank has changed its serviceability calculations for all new owner occupied/investment home loan or line of credit applications.
For those taking out a new mortgage who already have an existing CBA home loan, line of credit or business loan, the bank will assess the ability to pay through an interest rate buffer of 7.25% p.a. or the current interest rate plus 2.25% p.a. minus any existing rate concessions (whichever is higher).
For customers with an existing owner occupied/investment, line of credit or business loan with an external financial institution, CBA will apply a service loading of 30% to the current repayment amount.
The change brings CBA in line with the other majors.
Amendments have also been made regarding reporting standards with CBA now required to collect the following tax residency information from all customers:
- The name of all countries where the individual is a tax resident
- The Tax Identification Number (TIN) for countries other than Australia where the individual is a tax resident or a valid reason for not providing the TIN
These changes came into effect on 9 June and are included in the bank’s home loan on-boarding application form. CBA-accredited brokers can view a webinar that provides an overview of the associated alterations.
Finally, the bank has also released a fact sheet on repayments and customer scenarios to help brokers explain the difference between P&I and IO mortgages and why P&I repayments benefit mortgage holders.
“As Australia’s largest lender, Commonwealth Bank is committed to consistently delivering the best customer experience for home buyers, as well as meeting our responsible lending obligations,” a bank spokesperson told Australian Broker. “As a responsible lender, we constantly review our products and services to ensure we are maintaining our prudent lending standards and meeting our customers’ needs both now and in the future.”