As a young family with small children and a mortgage we never dreamt that we could afford an investment property but since we met you guys the...
 
Ned & Michelle - Sydney NSW

MAJOR BANKS HIKE INTEREST RATES!                                               August 2017

As many would have noticed, there have been major announcements recently about increases to interest rates by some lenders. Here is a quick overview of what’s happening.

The changes are directed at investor lending and the primary driver of the concern has been the continued increases in property values, particularly in Sydney and Melbourne.

APRA has now taken the next step with enforceable measures on the lenders as a lever to try and curb investment lending. They have also tweaked the capital requirements against exposure to residential mortgages. This has the effect of increasing the banks costs of lending, as they must now allocate additional funds to balance their loan portfolio.

As banks generally do, this cost has been passed onto the consumer rather than diluting their profits.

This means that if you currently have a variable rate investment loan , or an interest only owner occupied property loan, your interest rate will be going up.

And this is most likely just the beginning, with more to come as other lenders announce changes to their policy.

This now gives many second tier lenders who have not been impacted as much by these regulatory changes a comparative competitive advantage over the lenders who have had to pull back.

It’s likely that from here we will be placing more of our investor clients with these tier 2 lenders to get them the best deal.

We also expect to have a much higher volume of enquiries from our clients due to the sheer complexity of the changes and the speed at which they are coming about.

If you would like to know more about how this may affect your current loans or to arrange for a review of your home or investment loan please request a call back today.

The information contained within this website is used to illustrate and explain the key issues when purchasing investment property. Any information contained herein is generic and is not to be misconstrued as financial planning advice. All information is provided in good faith, however no liability will be accepted for errors or omissions howsoever caused.