Banks showing the love to property investors

For the past five years, investors have been paying higher interest rates than owner-occupiers. Recently though, this gap has been narrowing.

Today, investor borrowers could be paying up to 0.49 percentage points in interest more than owner-occupiers – well down on the reported gap of 0.60 percentage points from two years ago.

Investor lending peaked in April 2015 – there were $10.1 billion of new investment loans (excluding refinancing) in that month, according to the Australian Bureau of Statistics.

However, banks (under pressure from regulators) then made it harder for investors to get loans, through a combination of higher rates and stricter criteria.

By June 2020, the most recent month for which there is data, the value of new investment loans had fallen to $4.4 billion.

Fewer investors have been taking out mortgages, forcing banks to compete harder to maintain their lending volumes. One way they’re doing that is through record-low rates for new borrowers. Another is by trying to poach existing borrowers from rival banks with special refinancing deals.