Bye big banks, hello smaller lenders: Nearly 60% of Aussie property investors want to make the switch

By Katherine O'Chee ·

More and more Aussie property investors aren’t settling for the big banks when shopping around for a mortgage, new research has revealed. 

According to a recent annual sentiment survey from the Property Investment Professionals of Australia (PIPA), nearly 60% of Aussie investors now want to hop on board with non-big bank lenders. Meanwhile, in the past 12 months, 27% have actually taken the next step of securing an investment loan with a non-bank lender.

PIPA Chairman Peter Koulizos said tougher rules around borrowing money, along with growing distrust in the big banks, have meant many Aussie investors have had to set their sights wider while searching for mortgage options. 

“Given tight lending conditions and the financial sector’s response to the Banking Royal Commission, a staggering 25% of respondents have found they were unable to refinance an amount they were able to borrow previously,” Koulizos said. 

“Difficulty obtaining finance, as well as the popularity of banks being on the slide over the past year, meant that about 60% of investors are now more likely to consider a non-major bank lender, especially after the outcomes of last year’s Banking Royal Commission.” 

The survey also found increased borrowing power and cheaper interest rates were the top reasons driving investors away from the big banks and towards smaller lenders.

How switching to non-bank lenders could save you big bucks

In fact, Mozo data shows that just by switching to a non-bank lender and taking advantage of their more competitive rates, Aussie investors could potentially save hundreds of thousands of dollars over the life of their loan.

For instance, if you took out a $400,000 loan over 25 years at the average Big 4 investor loan rate (Principal + Interest) of 4.97% p.a., you would make $2,331 in monthly repayments and be charged $299,412 in total interest.**

But if you refinanced to the lowest investor variable rate in Mozo’s database at the moment^ - 3.19% p.a. (3.21% p.a. comparison rate*) with online lender’s Smart Home Loan - your monthly repayments would drop down to $1,937 and your interest costs down to $180,983, saving you a massive $118,429 in total interest!**

The bright side of property investment 

No doubt it’s been a rough year for investors, with 34% of survey respondents saying they purchased a property over the past 12 months, down from 43% in the previous year’s survey. 

But investors continue to hold high hopes for the housing market. About 82% believe now is a good time to invest in residential property, compared with 77% in 2018.

“Property investors are just trying to look out for their lot because when asked why they choose to invest, the most important reason was to provide a better life financially for themselves and their family, while the idea of ‘becoming rich’ was one of the least important reasons,” Koulizos said. 

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Brisbane remains the favourite capital city among investors, but Sydney’s appeal is back up, making a strong comeback at 14%, up from 9% the previous year. 

Ready to dive into the property market? Check out the investment loans below, or head over to our investment loans comparison table to compare even more options. 

Compare investment loans - last updated January 16, 2021

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.

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  • 1.99% p.a.variable for 12 months and then 2.74% p.a.

    2.71% p.a.

  • mozo-experts-choice-2020

    2.54% p.a.

    2.54% p.a.

  • mozo-experts-choice-2020


    2.65% p.a.

  • mozo-experts-choice-2020

    2.74% p.a.

    2.76% p.a.

  • mozo-experts-choice-2020

    2.59% p.a.

    2.56% p.a.


Talk to a Mozo home loans expert

Buying your first home, refinancing your existing home or thinking of investing? Speak to Steve, our home loans expert today!

*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $400,000 over 25 years.

** Calculations and figures as of 10 October 2019.

^ 3.19% p.a. (3.21% p.a. comparison rate*) on the Smart Home Loan for investors is available to borrowers who apply today, rate effective from 17 October 2019.

^See information about the Mozo Experts Choice Home Loans Awards

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Katherine O'Chee
Money writer

Katherine O’Chee is Mozo’s international money transfer and forex expert and business banking writer. She keeps Mozo’s readers on top of the latest news and writes in-depth features to inform and help Australians make smarter financial decisions. Her work has been published in major media outlets including Sydney Morning Herald, SBS News and Bangkok Post. She has a Bachelor of Arts (Media and Communications) from the University of Sydney. She is also ASIC RG146 (Tier 2) certified for general advice.