Commonwealth Bank Cuts Serviceability Buffer on Some Home Loans

Some Australian borrowers may find it easier to refinance their mortgages, with Commonwealth Bank of Australia saying it will make changes to the way it assesses home loans.

Australia's largest lender says it will cut the serviceability buffer it uses when assessing mortgages from 3% to 1% for those who meet its strict eligibility criteria.

"The alternative interest rate buffer servicing assessment rate of 1% will support customers refinancing existing home loan debts, which do not pass the standard 3% buffer over a 30-year period principal and interest loan, but who would otherwise be eligible to refinance to a CommBank home loan," says Michael Baumann, executive general manager of home buying.

This comes amid debate on whether it would be worthwhile for the Australian banking regulator to lower the buffer from 3%, a move that could it make easier for more applicants to refinance their home loans as they come off ultra-low rates.

Write to Alice Uribe at alice.uribe@wsj.com

(END) Dow Jones Newswires

June 21, 2023 03:07 ET (07:07 GMT)

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