Investment Loan Rate Increases

By Matthew Kenworthy | Property Investors

All four major banks have recently announced that they will be raising interest rates for both new & existing investor home loans. The reason the major banks have cited is requirements by the Australian Prudential Regulation Authority to reduce growth in investment loans.

We recently wrote about some of these investment loan changes last month.

Investment Loan Rate Changes

The Commonwealth Bank have increased their investment loan variable rates by 0.27% as have the ANZ Bank & Westpac. Whereas the National Australia Bank has increased theirs by 0.29%.

They have also made similar changes to new fixed rate home loan investment applications. However, borrowers with existing fixed rate loans will be unaffected.

It’s not just the major banks with many smaller lenders & lines of funding also either:

  • increasing rates on investment loans
  • and/or decreasing rates on owner-occupied loans

How the Changes May Affect You

Whether or not the change effects you, depends on the purpose of the original loan. For some lenders, the changes apply if the home loan purpose was originally an investment loan. For others it only applies if the facility is interest only (regardless of if the loan was for owner-occupied purposes or investment).

Ultimately these changes will make property investment more expensive for many and the economic effect will be interesting to observe. One possibility is that the increased borrowing costs will get passed on to renters in the form of higher rental prices. The effect that the regulator is hoping for is that property prices will stabilise, particularly in hot markets such as New South Wales.

If you are not satisfied with your current investment loan arrangement we do have lenders who have not currently increased their interest rates for investors. We are happy to discuss these options with you, via our obligation free mortgage broker service.

About the Author

Matthew Kenworthy is a specialist in all aspects of Residential & Commercial Finance. He can assist all borrowers from First Home Buyers to Property Investors with Large Portfolios.