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Jessica Darnbrough
As Australia’s non-bank lenders fight to let brokers know that low doc mortgages are still viable and affordable, one major has hiked up the interest on its suite of low doc and line of credit products.
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Earlier this week, the Commonwealth Bank of Australia announced it would lift the interest on its low doc home/investment home loans and line of credit loans by 25 basis points.
In a statement released to its broker partners, CBA said all customers who were funded in these types of loans prior to 1 April 2012 will have the reference rate name of their loan changed and the interest rate on their loan increased by 0.25 per cent.
The new reference rate name will be changing from Standard Variable Reference (SVR)/Base Variable Rate (BVR)/Residential Equity Rate to Low Doc Standard Variable Reference/Low Doc Base Variable Rate/Low Doc Residential Equity Rate.
Speaking about the changes, House and Home Loans owner Rael Bricker told The Adviser that he was “disappointed” to see CBA raise the interest on its low doc mortgages.
“It really is pricing some borrowers out of the market,” he said.
“And with the property market the way it is, we can’t afford to be stopping potential borrowers from jumping onto the property ladder.”
CBA’s move to increase the interest on its suite of low doc products is in stark contrast to some of the non-bank lenders in the market, who have been trying to reinforce the message that the low doc lending space is still alive and well.
Earlier this month, RESIMAC’s chief operating officer Allan Savins said the self employed sector was a “legitimate and underserviced segment of the market” and represented a potentially “lucrative market for brokers” provided they complete all the necessary checks and balances.
“As long as brokers take the time to make reasonable enquiries as to the borrowers’ needs and financial position and act with honesty and integrity, then there is no reason for brokers to be concerned about offering low doc styled loans to these borrowers,” he said.
