Each of the four major banks have announced that they will be increasing interest rates on investor lending, bringing interest rates for investor loans up by 0.29%, with one second tier lender announcing a 0.47% increase.
At the end of 2014, APRA set a 10 per cent annual speed limit on residential investor lending growth, meaning that growth in loans to property investors should not exceed 10 per cent. However, the four big banks were reluctant to follow these guidelines and Reserve Bank figures show that property investor lending grew by 10.7 per cent, compared to 5.5 per cent growth for owner-occupier loans.
APRA has stepped in to crackdown further and ordered that the four major banks hold billions of dollars more in capital reserves to protect against losses on their loan portfolios. This has led to lenders increasing interest rates on new and existing investment loans – rising up to 0.47% with one second tier lender.
The four major banks have all increased their interest rates and some 2nd tier lenders have followed suit also bringing interest rates up for investment loans.
What does this mean for Investors?
This new change in investor lending has created a few hurdles for current investors as well as prospective investors. For those with a variable home loan, the changes in investor lending may also affect your home loan. If you or someone you know may be affected by these rate changes, our finance brokers are on hand to discuss these changes in further detail and advise of the best lender for your financial situation.