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^
| Lender | Home Loan | Payments | Rate |
|---|---|---|---|
| Reduce Home Loans | Investor Rate Slasher | Principal & interest | 3.19% (3.27% comparison rate*) |
| Well Home Loans | Well Balanced | Principal & interest | 3.27% (3.29% comparison rate*) |
| FreedomLend | Variable Home Loan | Principal & interest | 3.34% (3.34% comparison rate*) |
| Homestar | Variable Rate Loan | Principal & interest | 3.39% (3.44% comparison rate*) |
| State Custodians | Low Rate Home Loan with Offset | Principal & interest | 3.40% (3.41% comparison rate*) |
The investor rate gap
Despite the recent rate shifts, the gap between investor home loan rates and owner occupier home loan rates remains significant.
Following the RBA’s June and July cuts, the average owner occupier principal and interest home loan rate in the Mozo database currently^ sits at 3.99% (based on a $300,000 residential loan at 80% LVR) - a full 42 basis points below the average investor principal and interest home loan rate of 4.41%.
The gap is less pronounced for interest-only loans though, with the average rate in the Mozo database for owner-occupiers currently^ sitting at 4.51% compared to 4.69% for investors.
As the graph below shows, the difference in owner occupier and investor rates has ballooned significantly since APRA introduced an investor lending cap in February 2017.
“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.
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Looking to capitalise on the recent rate drop by refinancing or applying for a new investor loan?
Check out some of the hot investment home loans in the table below or make your way over to the Mozo home loan comparison tables to compare even more offers.
Investment home loans - last updated 13 August 2022
-
Green Home Loan
Investor, Principal & Interest
interest rate
comparison rate
Initial monthly repayment3.89% p.a. variable4.31% 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.
CompareCompareGreen Home Loan
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.
- interest rate
- 3.89% p.a. variable
- comparison rate
- 4.31% p.a.
- variable rate
- 3.89% p.a.
- comparison rate
- 4.31% p.a.
- Upfront fees
- $520
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes - 0.10% loading
- Maximum loan to value ratio
- 90.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Investor
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
Read our Mozo Review to learn more about the Green Home Loan
-
Unloan Variable
Investment, Refinance Only
interest rate
comparison rate
Initial monthly repayment3.44% p.a. variable3.36% 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.
CompareCompareUnloan Variable
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.
- interest rate
- 3.44% p.a. variable
- comparison rate
- 3.36% p.a.
- variable rate
- 3.44% p.a.
- comparison rate
- 3.36% p.a.
- Upfront fees
- $0
- Ongoing fees
- -
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $3,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Investor
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
Read our Mozo Review to learn more about the Unloan Variable
-
PAYG Home Loan
Owner Occupier, Principal & Interest, LVR<80%
interest rate
comparison rate
Initial monthly repayment3.29% p.a. variable3.33% 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.
CompareComparePAYG Home Loan
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.
- interest rate
- 3.29% p.a. variable
- comparison rate
- 3.33% p.a.
- variable rate
- 3.29% p.a.
- comparison rate
- 3.33% p.a.
- Upfront fees
- $840
- Ongoing fees
- $0.00
- Discharge Fee
- $500.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- Optional - $10 per month
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $250,000
- maximum borrowing amount
- $3,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
Read our Mozo Review to learn more about the PAYG Home Loan
^ 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.
* 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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