Key points
- CBA shareholders dip into buy now, pay later-style home loans
- Many first home buyers can't afford the required deposit
- OwnHome plans to buy 200 homes for approved customers
Commonwealth Bank of Australia (ASX: CBA) has reported a new investment in the home loan space.
If you own CBA shares, you'll want to know about rent-to-own start-up, OwnHome.
What investment did CBA announce?
CBA, via its wholly-owned subsidiary x15ventures, said it has joined with SquarePeg to invest in OwnHome's Series A fundraising round. Funds will be used to drive OwnHome's growth ambitions.
With house prices soaring, particularly in proximity to the capital cities, many new home buyers can't afford the required deposit for a new mortgage — usually 20% of the purchase price.
That's where OwnHome steps in, enabling "approved, credit-worthy customers" to move into a home and pay for their deposit over time via monthly payments. They then have the option to buy that home at a pre-set price after 3–7 years. And they can use the deposit they've been paying towards the purchase.
Not unlike purchasing your new bedroom set with a buy now, pay later (BNPL) service.
Commenting on CBA's investment, Toby Norton-Smith, managing director of x15, said:
Housing affordability is a challenge for many Australians, particularly young people and their families. We believe OwnHome will provide an alternative path to home ownership, particularly for first home buyers who are responsible savers but aren't able to rely on the bank of mum and dad for help with the deposit.
Angus Sullivan, CBA's group executive retail banking services, added:
As Australia's largest lender to first homebuyers, innovating and improving the home buying journey is the cornerstone of what we are doing to help our customers and today's investment in OwnHome will provide greater choice to those who dream of home ownership but seek a different route to the traditional rent-and-save approach.
OwnHome currently has some 3,500 applicants on its waiting list. The company intends to buy 200 homes for approved customers over the next 2 years.
How have CBA shares been tracking?
Over the past 12 months, CBA shares have gained 7%, outpacing the 5% gain posted by the S&P/ASX 200 Index (ASX: XJO).
So far in 2022, the CBA share price is down 9%.
