Investors Hit with Increased Interest Rates

Whilst the cash rate remained on hold at 2.00% for the third consecutive month in August, some banks have started to lift interest rates on investment loans. So why target investors and what does it actually mean if you are considering investing in property? Here’s the 30-second lowdown:

Why is this happening?
Housing ‘bubble’ talk is rife in the likes of Sydney and Melbourne. Regulators, in particular The Australian Prudential Regulation Authority (APRA) is concerned about unsustainable property price increases and has implemented a cap on investment lending portfolios for banks meaning they can only increase their lending to investors by 10% each year. 

What do the increases look like?
The top four banks (CBA, Westpac, ANZ, NAB) were quick to announce interest rate rises to investors, which average between 0.27 and 0.29 per cent. Smaller lenders have followed through in the last few weeks. There are predictions the gap between loans for owner-occupiers and investors will increase over the next 6 months with some spectators indicating up to a full 1.0 per cent the difference.

Who will be affected?
These increases impact investment lending only, particularly first time investors and possibly self-managed superannuation funds considering property investment. At this stage owner-occupier loans remain unaffected by these increases.

How can I get a better finance deal?
Whilst on the surface it might sound a little gloomy, in reality there’s never been a better time to shop around for a better home loan package.

We are working with new and established property investors to secure competitive finance everyday. We know which banks are more receptive to the investor market and who is still offering value for money – which can change daily at the moment!

If you are considering your options whether it be to purchase a new home or investment property or refinance your existing loan, we can help you to get the right loan at the right price, the first time round. Simply give one of our professional finance consultants a call on 07 3899 2866 to find out how much you could save.