Investors targeted in new mortgage interest rate hikes

Monday 12 December 2016

Article by Roisin Kelly-Goldsmith

The banks certainly have been busy over the last month, aggressively raising interest rates on fixed rate loans, in addition to some variable rate loans.

Now property investors are the target, as Mozo data found a range of lenders will be increasing rates on investment loans by up to 15 basis points.

<<update 13 Dec 2016>> CommBank has today announced an investor loan interest rate increase of 7 basis points, making it the final big four bank to lift rates for investors.

CBA Group Executive for Retail Banking Services, Matt Comyn, said the decision was made after careful consideration.

“We believe these changes balance the needs of our borrowers and shareholders, while helping to underpin the long-term sustainability of the Australian home loan market.”

UBank was the first provider to hike rates by 0.10%, followed by RAMS, ING Direct, and Suncorp. Big four lender NAB raised rates by 15 basis points, while ANZ and Westpac announced they would raise investor loan rates by 8 basis points, set to kick in this Friday.

This is not the first time investors have been stung by rate increases, as a range of lenders tightened restrictions for investors in July and August of 2015, following requirements by APRA to reduce their investment loan portfolios to under 10% growth per annum.

Mozo data shows that this year alone there has been a 50% increase in the number of providers charging higher interest rates to investors, bringing the average investor loan rate 0.27% higher than the average owner occupier rate.

According to Mozo’s Product Data Manager Peter Marshall, investors should prepare themselves for further increases in the New Year, as a result of APRA’s stringent lending requirements.

“It’s likely we’ll see even more lenders slap a higher interest rate on their investor home loans in 2017 as an easy way to offset the onslaught of higher funding costs on their profit margins,” he said.

While investor rates may be increasing, according to Marshall it’s not all bad news, as a mystery shop experiment conducted by Mozo found investors could receive a discounted rate of up to 1.45% from the big four banks.

“Our mystery shop results suggest that banks are now open to negotiating on investor rates again, with three out of the four big banks reserving their largest discounts for investors,” Marshall explained.

Ready to lock in a competitive interest rate before lenders raise investment loans further? Compare rates and features across 483 products offered by 84 providers at our comparison hub.

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