Commonwealth Bank of Australia (ASX: CBA) is about to make major changes to risky home loans.
Fairfax is reporting that Commonwealth Bank is simplifying its loans by removing the one-year guaranteed rate, seven-year fixed rate, 12-month discounted variable rate, rate saver, three-year special rate saver and no fee loans.
Low documentation products are going to be removed for some types of borrowers.
For readers who don’t know, a low doc loan is a loan that is for people who don’t have much information to give to potential lenders, this is mainly for self-employed people who may not have tax returns or financials to give as evidence of their earnings.
Commbank said the tightening on low doc loans will be implemented on 29 September 2018.
Brokers Uncertain
Commonwealth Bank has been under pressure from all sides of the Royal Commission. From financial advice to mortgage broking through to its network of ATMs, the bank recently announced sweeping changes to its corporate structure, including spinning off its brokerage business.
Not only that, recent news that house prices are heading down might be adding to the pressure on Commonwealth Bank, which has a big part to play in the property market.
Anecdotally, there are reports of people being approved for $200,000 less than they were approved for before the Royal Commission. House prices will struggle to move higher if loans continue to be harder to get.
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