Australia Markets closed

CBA targets investors with rate hike

Stuart Condie
AAP

Commonwealth Bank is lifting some of its mortgage rates as it tries to rein in stubbornly high investor lending growth and keep on the right side of the regulator.

Chief executive Ian Narev said investor lending remained strong during the first half of the financial year, in which the bank's profit rose to a record $4.9 billion, with demand from home and overseas.

But the Australian Prudential Regulation Authority restricts banks to a 10 per cent annual increase in the amount they lend to property investors, and Mr Narev said CBA was taking steps to make sure it does not breach the cap.

The bank is raising rates for interest-only investor loans by 0.12 per cent to 5.68 per cent from April 3.

Also read: CBA super profit: $4.9bn for half-year

Rates for Viridian line of credit mortgages - which allow customers to use their equity for other investments - are rising by 0.04 per cent.

"We have not exceeded the 10 per cent benchmark and we are determined not to," Mr Narev said.

"In an environment of strong growth, there are steps we can take to do that and some of it is pricing responses, which led to some of the repricing including this morning."

Commonwealth Bank said it was committed to maintaining the long-term sustainability of a strong Australian housing market.

Also read: CBA warm on economy after record HY profit

The bank this week stopped accepting applications from property investors seeking to switch their loans from other lenders, a week after its subsidiary Bankwest advised brokers of an identical move.

"Another aspect is making sure we can support existing customers as a priority," Mr Narev said.

"One of the steps we'll take is reducing refinancing from other financial institutions because we don't want to come to a point where our own customers are coming to us saying they want to borrow and we say 'we can't because of the benchmark.'"

APRA chairman Wayne Byres said last week that the 10 per cent cap had slowed investor lending, but warned there had been a pick-up in recent months.