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

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 loans.com.au’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 13 August 2022

Search promoted home loans below or do a full Mozo database search . Advertiser disclosure
  • Green Home Loan

    Investor, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    3.89% p.a. variable
    4.31% p.a.

    Great low rate on investment loans when you package with your owner-occupied loan. Get a 7.0 star NatHERS rating or higher for up to 1.79% discount on your variable rate home loan. For homes less than 12 months old.

    Details
  • Unloan Variable

    Investment, Refinance Only

    interest rate
    comparison rate
    Initial monthly repayment
    3.44% p.a. variable
    3.36% p.a.

    For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.

    Details
  • PAYG Home Loan

    Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    3.29% p.a. variable
    3.33% p.a.

    Low variable rate. Ideal for new home buyers or refinancers. Unlimited additional repayments. Unlimited free redraw. Application completely online. Optional 100% offset can be added for $120 p.a.. 20% deposit required.

    Details
  • Discounted Home Value Loan

    Investment, Principal & Interest, LVR <70%

    interest rate
    comparison rate
    Initial monthly repayment
    3.42% p.a. variable
    3.43% p.a.

    Competitive variable Investor rate. Unlimited extra repayments for free. Enjoy the flexibility to redraw additional payments at no charge. Receive $3,288 cashback when you refinance an existing home loan of $250,000. Must apply by 31 August 2022 and settle by 31 October 2022

    Details
  • PAYG Investor Loan

    Investment, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    3.64% p.a. variable
    3.68% p.a.

    Low variable rate. Ideal for investors buying or refinancing. Unlimited additional repayments. Unlimited free redraw. Application completely online. Optional 100% offset can be added for $120 p.a.. 20% deposit required.

    Details

*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 loans.com.au Smart Home Loan for investors is available to borrowers who apply today, rate effective from 17 October 2019.

* 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 $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

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