CBA limits Wizard funding

Commonwealth Bank agreed to refinance a smaller share of the Wizard Home Loans loan book than GE Capital will have hoped for as part of the sale of Wizard to Aussie. CBA owns one third of Aussie.

The bank yesterday said in an ASX announcement that it agreed to fund $2.25 billion in loans. GE Capital has around $16 billion in loans through Wizard and associated GE mortgage brands and had hoped that CBA would take on funding of extra loans.

CBA will at least cut the interest rate charged to customers by one percentage point for the portfolio of Wizard loans it will fund, consistent with the bank's pricing of its own range of home loans.

Wizard and GE customers funded through GE have been denied the most recent round of rate cuts as GE endeavours to persuade customers to refinance quickly through any other lenders. A waiver of the break fee is available on most loans though Wizard customers are being steered by GE to refinance using Aussie as a broker.