Commonwealth Bank confirms $33,000 home loan change for these Aussies: ‘Lower deposits'
CBA currently allows customers to borrow up to 90 per cent for securities valued under $3 million and up to 75 per cent for those valued between $3 million and $5 million. From May 24, the major bank will increase the maximum LVR to 95 and 80 per cent respectively for construction loans, while raising the maximum security for the top bracket to $6 million.
CBA executive general manager home buying Dr Michael Baumann told Yahoo Finance the major bank was committed to helping Australians realise their property ownership goals.
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'Our expanded construction loan policy is designed to create more opportunities for Australians interested in building their property to achieve homeownership sooner by allowing them to access construction finance with lower deposits,' he said.
The average construction loan in Australia was $674,649 for new builds in the December quarter, according to Australian Bureau of Statistics data.
Under the previous rules, a 10 per cent deposit would have been $67,474.90.
Now the requirement for a 5 per cent deposit halves that deposit amount to $33,732.40.CBA has made a range of changes to its home loan rules in recent months, including offering loans for prefabricated home builds.
Prefab homes are constructed off-site, mostly in a factory, and then transported to the individual's desired location, making them a cheaper option than traditional housing.
'Prefabricated homes have historically been difficult to finance in Australia,' Baumann told Yahoo Finance.
'Our prefab housing policy update allows customers to access progress payments before the property is affixed to land (up to 60 per cent of the total contract price), instead of requiring them to fund up to 90 per cent of the upfront costs themselves as has previously been the case.'
CBA has also announced it will remove HECS loans during serviceability assessments if the debt will be repaid within 12 months.
Other changes include allowing first-home buyers to rent out a room and use the rental income to help service their home loan. Customers can count up to $150 per week in servicing, with one renter allowed.
It is also piloting an expansion to its LMI waiver program to include more workers like paramedics, firefighters and nurses.
CBA economists expect the Reserve Bank of Australia (RBA) will cut interest rates at its upcoming May meeting, despite inflation figures coming in a touch higher than it had expected.
The major bank has forecast three interest rate cuts this year in May, August and November, which would bring the cash rate down to 3.35 per cent.
Westpac, ANZ and NAB are also expecting a May cut, with NAB predicting a double 0.50 per cent cut.Sign in to access your portfolio
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