Home Loan Market Update – April 2017
Quick Summary
The Australian Prudential Regulatory Authority (APRA) and the Australian Securities and Investments Commission (ASIC) are doubling their efforts to reduce the growth in property prices. Especially in Sydney and Melbourne.
Once again, they are looking to do this by reducing the number of Investors in the market and reducing their collective capacity to borrow. They are targeting interest only lending hoping to reverse the growth of interest only loans in the market.
Lenders have again responded by increasing the interest rates on their loan products. They are specifically targeting Interest Only and Investment loan products which are the ones most favoured by Investors.
The table bellow will give you an overview of the changes in the market over the last 30 or so days. We will be updating this table on a regular basis as lenders update their rates throughout the month of April.
| Bank | Products Affected | Increase | Effective Date |
|---|---|---|---|
| CBA | Investment Home Loans – Interest Only | 0.12% | 3-Apr-2017 |
| 0.26% | 8-May-2017 | ||
| CBA | Investment Home Loans – Principal and Interest | 0.24% | 8-May-2017 |
| CBA | Owner Occupied Home Loans – Interest Only | 0.25% | 8-May-2017 |
| CBA | Owner Occupied Home Loans – Principal and Interest | 0.03% | 8-May-2017 |
| St George | Investment Home Loans – Interest Only | 0.31% | 8-May-2017 |
| St George | Investment Home Loans – Principal and Interest | 0.23% | 8-May-2017 |
| St George | Owner Occupied Home Loans – Interest Only | 0.08% | 8-May-17 |
| NAB | Investment Home Loans – Interest Only | 0.25% | 24-Mar-2017 |
| NAB | Investment Home Loans – Principal and Interest | 0.25% | 24-Mar-2017 |
| NAB | Owner Occupied Home Loans – Interest Only | 0.07% | 24-Mar-2017 |
| NAB | Owner Occupied Home Loans – Principal and Interest | 0.07% | 24-Mar-2017 |
| ANZ | Investment Home Loans – Interest Only | 0.25% | 31-Mar-2017 |
| 0.11% | 22-Apr-2017 | ||
| ANZ | Owner Occupied Home Loans – Interest Only (new lending) | 0.20% | 22-Apr-2017 |
| Westpac | Owner Occupied Home Loans – Principal and Interest | 0.03% | 24-Mar-2017 |
| Westpac | Owner Occupied Home Loans – Interest Only | 0.08% | 24-Mar-2017 |
| Westpac | Investment Home Loans – Principal and Interest | 0.23% | 24-Mar-2017 |
| Westpac | Investment Home Loans – Interest Only | 0.28% | 24-Mar-2017 |
What You Need To Do
As per our advice from March, if you’re using an Interest Only Home or Investment Loan, you need to:
- Speak with your Accountant – Check with your Accountant first to see if you are better off staying with your current Interest Only loan or switching to a Principal and Interest loan at a lower rate. While you can save on the interest paid by switching to a P&I loan on a lower rate, there maybe unintended tax implications.
- Speak with your Mortgage Broker – If your Accountant advises that you are better off on a P&I loan, contact your Mortgage Broker / Loans Advisor. They should be able to help you identify the loan that best suits your current needs.
- Review your loan – Contact your Mortgage Broker / Loans Advisor in order to organise a loan review. There maybe new Interest Only products on the market that are more suited to your current needs.
Remember, Interest Rate is important but it’s not the only factor when choosing a Lender.
The product, facility and bank policies all have to be able to help you achieve your financial goals. Every Lender has their pros and cons and everyone’s situation is different. What works for one Borrower, may not work for another.
