He loves me. He loves me not. He loves me. He loves me not. He loves me! The ‘he’ I refer to in this instance actually encompasses many Aussie lenders who are busy rekindling their romance with investors, wooing them back with low rate offerings once more.
Just 12 short months ago we were lamenting the demise of the relatively cheap and easy credit run investors had enjoyed, when the Australian Prudential and Regulatory Authority (APRA) implemented strict macroprudential policies to limit the growth of investor driven borrowing.
At that point, the banks used the regulator’s tougher stance as an opportunity to up their retail rates independent of the Reserve, citing inflated costs of funding and compliance with newly imposed limitations on the growth of investor driven business as the reason behind the controversial decision.
Now though, the Bank of Queensland and Suncorp have put away the big stick they’ve been using to drive property investors away, deciding they truly love doing business with them after all.
It’s no wonder so many borrowers are feeling a little perplexed of late.
Go away. Wait…Come back!
The Bank of Queensland (BOQ) announced last week that it would drop the variable rate on its Investor Clear Path package by a massive 70 basis points to 4.19 per cent, while its owner-occupier Clear Path loan was reduced by 48 basis points to 3.99 per cent.
But wait…there’s more! The lender also slashed its three year fixed rate by 60 basis points for owner-occupiers to just 3.69 per cent and by 40 basis points for investors to a very beguiling 3.89 per cent.
There are of course a few provisos on these deals, including a maximum LVR of 80 per cent and the inability to access lower rate offerings for those looking to refinance or restructure existing facilities.
But for applicants who qualify and whose requirements will be sufficiently met by the packages these rates apply to, they represent exceptional value for money.
Suncorp has also launched a raft of offers under its Better Together brand, including a variable rate of 3.92 per cent on basic owner-occupier mortgages of at least $150,000 (maximum LVR of 90%) and 4.19 per cent for new investment loans.
Joining the discount wars, ING Direct has slashed its investor home loan products by up to 38 basis points and is currently offering a very alluring 3.97 per cent three year fixed loan option.
For those looking for greater stability, what about ING’s four and five year fixed rate that’s been lowered by 10 basis points to just 4.59 per cent?
Make your move
Right now, it seems the sector is witnessing a play by the non-majors to secure a greater portion of investor based business, with some smaller players seizing the opportunity to compete with the Big 4 and lure their customers away with undeniably enticing deals.
Greater Bank is another that’s been slashing rates on investor loans, with its five year fixed offering for investors recently reduced by 20 basis points to 3.99 per cent.
Greater Bank CEO Scott Morgan acknowledges that investors were feeling frustrated at the stonewalling they’d recently experienced by the big boys, as many lenders have made the acquisition of new investment mortgages tougher to secure.
“We expect people with or looking for an investment property will see this cut as excellent news and expect to have many big bank customers looking to switch,” he said.
Bank on your broker
Of course the advantage many smaller lenders have right now is that they still have a long way to go before exceeding APRA’s imposed limit of 10 per cent growth in investor-based business. As a result, they finally have a bit of a competitive edge.
This is indeed good news for investors, who can take comfort in the fact that there are still options available to access the necessary credit to commence or continue growing a residential property portfolio.
As always, the trick is in knowing where to look according to your specific needs and circumstances.
Now, more than ever, it literally pays to have a mortgage broker on your side…someone who understands the intricacies of investment finance structuring and has a wide variety of lenders and products to select from.
Remember, it’s not just about the cheapest rate. It’s about the most effective overall loan package that will help you get ahead and realise your property investment objectives.
And when it comes to matching the perfect loan product to your exacting needs, no one does it better than a good broker!
About the Author
Since 2008, David Thomas has built a business aimed at servicing the needs of property investors, owner occupiers and small business owners. David is recognised as one of the top 10 independent mortgage brokerages in the country, David and his team have settled almost billions of dollars worth of residential and investment loans over the last decade.
Known for his straightforward, relatable style, David believes by educating people about property funding; they fare better in the market. By sharing his expertise openly, some of the people he educates will likely become his clients. It's a win-win approach.
David Thomas is a credit representative (Representative Number 506153) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237).