Commonwealth Bank Boosts Home Loan Accessibility for Australians
Commonwealth Bank of Australia (CBA) is set to enhance opportunities for aspiring homeowners by adjusting its construction loan policies. This initiative aims to help individuals with smaller deposits get one step closer to owning their own homes.
From 24 May, CBA will increase the maximum loan-to-value ratio (LVR) for construction loans. Currently, the bank permits customers to borrow up to 90% of the value for properties priced under $3 million and 75% for those valued between $3 million and $5 million. The new policy raises these limits to 95% and 80% respectively and extends the maximum property value in the top bracket to $6 million.
Dr Michael Baumann, CBA’s Executive General Manager for Home Buying, conveyed the bank’s dedication to facilitating Australian homeownership. He expressed that the revised construction loan policy aims to present more opportunities for those keen on building properties, allowing access to construction finance with reduced deposit requirements.
Statistics from the Australian Bureau of Statistics indicate that the average construction loan in Australia for the December quarter stood at $674,649 for new builds. Under the former regulations, a 10% deposit would necessitate an upfront amount of approximately $67,475, but with the new 5% deposit requirement, this figure shrinks to about $33,732.
In recent months, CBA has implemented various changes to its home loan regulations, including provisions for financing prefabricated homes. These homes, which are built off-site and then transported to their final locations, offer a more economical option compared to traditional building methods. Baumann noted that financing prefab homes had been a challenge in Australia, but the updated policy now allows customers to access progress payments of up to 60% of the total contract price before the homes are placed on the land, rather than bearing 90% of the upfront costs.
Moreover, CBA announced that HECS debts would no longer count against borrowers during serviceability assessments if they are expected to be repaid within a year. The bank is also allowing first-time home buyers to rent out a room in their new homes and use the rental income—up to $150 per week—to assist with their mortgage repayments, thus introducing a more flexible approach to home buying.
These changes represent CBA’s commitment to easing the financial burden on Australians looking to enter the housing market, particularly those who may have struggled to gather sufficient deposits previously. As the largest bank in the country, CBA’s moves could significantly influence the home financing landscape, making property ownership more attainable for many Australians.
