Mixed for­tunes on rates

In­vestors to pay more for loans

The Weekend Post - Real Estate - - Real Estate - ME­GAN NEIL, AAP

THE low loan rate party for in­vestors is end­ing, but be­gin­ning for owner oc­cu­piers, who could be about to en­joy dis­counted fixed rates and pack­aged home loan deals.

Many lenders, in­clud­ing most of the ma­jor banks, have hiked in­ter­est rates for in­vestors while also mak­ing it harder for them to get loans as the reg­u­la­tor tries to take some of the heat out of the in­vest­ment prop­erty mar­ket.

Fi­nan­cial com­par­i­son web­site RateCity’s bank­ing an­a­lyst Peter Arnold says hous­ing in­vestors will be pay­ing more, while lenders may now in­stead sweeten the deal for those peo­ple buy­ing prop­erty as their home.

“I think the low rate party for in­vestors is end­ing,” he said.

“The low­est rates are go­ing to be of­fered to peo­ple who are in­tend­ing on liv­ing in the prop­erty and in­vestors will get charged the full amount.”

Mr Arnold said it marked the end of in­vestors and owner oc­cu­piers get­ting about the same deal in hous­ing loans, or in some cases in­vestors get­ting an even bet­ter deal through rate dis­counts.

“It’s some­thing where in­vestors are go­ing to pay more than owner oc­cu­piers, as far as how much they pay in the rate and how much they have to bring as far as a de­posit,” he said.

Some lenders have al­ready cut fixed rates for owner oc­cu­piers and ex­perts say fur­ther dis­counts are pos­si­ble.

Mr Arnold also pre­dicts more lenders will re­duce or stop the rate dis­counts they had given in­vestors while tweak­ing dis­counts of­fered to owner oc­cu­piers through pack­age deals which com­bine home loans, credit cards and sav­ings ac­counts.

“I think be­tween the fixed rates and the pack­age dis­counts, even more of that dif­fer­en­tial pric­ing for the whole vari­able book, in­vestors are go­ing to be pay­ing a lot more,” he said.

“Risk-based pric­ing is some- thing I think we’re go­ing to see more of, whether that’s residential ver­sus in­vest­ment or within residential we’re al­ready see­ing a lot more pric­ing by LVR (loanto-val­u­a­tion ra­tio) – you have a big de­posit, you pay less.”

The Aus­tralian Pru­den­tial Reg­u­la­tion Au­thor­ity has set a “speed limit” re­strict­ing growth in in­vestor lend­ing to 10 per cent a year and will re­quire banks to hold more cap­i­tal against their mort­gage books.

Mr Arnold said the changes are de­signed to sta­bilise the mar­ket and to slow down hous­ing price growth.

“As an owner oc­cu­pier that is what you want: it’s your home, it’s your big­gest in­vest­ment. You don’t want prop­erty prices in­creas­ing too quickly if that means they’re go­ing to come down in price at some point.

“It also means if you’re an up­grader, if in­vestors aren’t run­ning so hot then it eases the com­pe­ti­tion for who you’re fight­ing against on the prop­erty lad­der.”

Pic­ture: THINKSTOCK

UPS AND DOWNS: Low loan rates for in­vestors might be end­ing, but owner oc­cu­piers may be set to en­joy dis­counted rates.

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