Investor home loan rates sliding, but gap to owner occupiers persists

With the dust well and truly settled in the wake of back-to-back RBA cuts, it’s now clear that Australians with owner-occupier home loans aren’t the only beneficiaries. 

An analysis by Mozo has revealed that investors have also received partial rate cut relief, with the average principal and interest home loan rate in the Mozo database having dropped by 35 basis points since June 1. 

Interest-only investor home loans have fared even better, with lenders having cut rates by an average 37 basis points since the start of June. 

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On average, the drop means that an investor with a $300,000 loan (making principal and interest repayments over a 30 year term) will be $63 a month better off or $22,570 better off over the 30 year period.

“The RBA’s decision to cut 50 basis points off the official cash rate this year and the removal of the APRA cap on interest only loans has warmed up the paddles of life for property investors,” said Mozo Property Expert, Steve Jovcevski.

“It’s encouraging that as well as rate cuts for investors paying principal and interest, we’re seeing a downward movement on interest only loans. This time two years ago property investors were staring down average interest only rates of 5.12% and lenders were handcuffed around the volume of loans they could issue by the APRA cap.” 

The recent rate cuts have also sharpened some of the lowest rates currently^ in the Mozo database, with investors able to take advantage of a handful of principal and interest offers of 3.40% and below. 

Variable investor home loan rates of 3.40% and below^

The investor rate gap

“While this rate relief is welcome news for investors, compared to owner occupiers, they are still in the hurt locker. At a time when rental returns are under pressure, it’s still difficult to lay a solid foundation for investing in property,” Jovcevski said.

^ Accurate as of time of writing. 

*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.