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Can anything be done about these recent rate rises for investors?

Discussion in 'Property Finance' started by TMNT, 20th Aug, 2015.

  1. TMNT

    TMNT Well-Known Member

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    Noem if the global rates rose. I woukd expect a rate rise on my loans. Fair enough

    But this new 0.25% odd rise on investment loans only says to me its a bs increase in profits while making it sound like its not their choice

    Is there a way to either get your ip loans not increased or negotiate a better deal or anything?
     
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  2. Tony Fleming

    Tony Fleming Well-Known Member Business Member

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  3. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    They would if they could.
     
  4. Big Will

    Big Will Well-Known Member

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    If IR went up to 7% you will see rents increase.
     
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  5. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Not really much you can do about it.
    Suppliers increase their prices/rates/fees all the time, they running a business too.
    They got a product/service and you need it to operate, what can you do?
    All you can do is shop around for the best deal and possibly negotiate a little.
     
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  6. chylld

    chylld Well-Known Member

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    Rents are largely determined by the market, not solely by our costs.

    Plus, did you lower your rents when the interest rate fell in May?
     
  7. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    There's a few lenders out there that haven't raised their rates yet, but not many. I suspect there's a few lenders that are taking advantage of this to gain some market share, but at some point many of these are also likely to increase their rates. You might find that refinancing is simply an exercise in spending some time any money to move, only to end up paying about the same anyway.

    Additionally lenders aren't negotiating on investment rates any more. What you see is what you get.

    At the end of the day, most lenders are within about 0.1% of each other, which is no different to what it's always been. Investment rates are now back to what they were in February this year, it's not exactly a financial disaster.

    What they are hungry for however, is PPOR lending. Perhaps you can't do anything with your investment debt, but you can possibly get some of it back by reviewing your PPOR mortgage. Right now there's mainstream lenders offering better deals than some of the online lenders.
     
  8. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    better than Ir 4.06% with offset by loans.com.au for ppor ?
     
  9. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    Rent will not rise just because IR has gone up to 7%, It would depend on vacancy rate at that time,
    The monthly interest payment for investors will increase by more than 40/50% if IR goes to 7%
     
    Last edited: 21st Aug, 2015
  10. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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  11. Tony Xia

    Tony Xia Member

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    If you want to speak to a robot and get bad service then loans.com is the way to go, the rate rise for investment loans was always on the cards since they cannot increase the current cash rate due to the growth of the economy, all my clients thought it was a really good idea to get into the market for IP but I also warned them the potential rise in rates in the future which banks just increased all rates for IP.

    If vendors wants to increase their rent to compensate for the increase in rates then go for it, but there are so many properties in the process of being completed the tenants can move into a newer place for the same amount of money they paying for rent now, IMO I rather have the same good tenants that you know will look after the place then re lease to a newby and get the extra $20 a week rent.

    Just my opinion
     
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  12. dan2101

    dan2101 Well-Known Member

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    Tony I totally disagree with your statement regarding loans.com.au.
    I had my reservations about them but out of all the lenders I've used over the years they have actually been the easiest to deal with! Never had a problem speaking to someone and the process has been super smooth. And the comparison rate of 4.04% is way better than most of the 'bigger' lenders.

    Call my cynical but I've noticed most of the criticism and negative talk about loans.com.au is coming from mortgage brokers.
     
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  13. Gypsyblood

    Gypsyblood Well-Known Member

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    I have been with loans.com since I bought my PPOR 2 years ago. Curently at 3.66 variable with 100% offset. Have had no issue in getting the loan etc and now looking to refinance. Will report how that goes so far seems straightforward.
     
  14. Redom

    Redom Finance Strategist - Sydney Business Plus Member

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    A few suggestions; can:

    1. Pay off principle debt; they want you to do this and will have greater pricing differentials over time, especially if IO lending doesn't come down to meet new APRA targets.

    2. Switch gears and look to upgrade etc - massive driver of the sydney market at the moment.

    3. Fix rates with lenders that haven't adjusted - eg plenty don't charge higher IO rates for fixed products - Westpac's move last week suggests this will likely change in coming months though.
     
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  15. PandS

    PandS Well-Known Member

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    Banks are a private organisation they are out there to make money, just like you out there making money in properties and rental incomes.

    They raise rate because of APRA limit, they can't write more loan than they want so they jack up rate to compensate and maintain their profit and they keep jacking up rate as much as long as they want to compensate that loss of new loan they want to write but APRA won't let them.

    and if you don't think APRA limit is real, CUA just then suspend lending to all investors because they are reaching the limit.

    But At the end of the day, each investor must be prepared to manage and deal with system risk and market risk, in good time no one knows what the $@$@$ it is because they don't really exist
    but all of it will come out during the bad time.

    Just like high leverage, no one sees the downside until the bad time and it can be extremely damaging.
     
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  16. Marg4000

    Marg4000 Well-Known Member

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    Go back about 15-20 years and investment loans were always at a higher interest rate.

    Around 2% higher!
    Marg
     
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  17. PandS

    PandS Well-Known Member

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    need to learn about supplies and demand and marketplace.
    Cost has little bearing on the amount of money you can charge a client unless
    you in some sort of monopoly business where there are no alternative

    A lot of business run at a loss because they can't charge the price they want and their cost is higher compared to similar business because of Debt.
    Just like properties investors there are those with little debt, no debt vs high leverage.

    What do you think happen when the bad times comes? these guys not only get all the tenant by lower rental cost plus they can snap up, even more properties at an even cheaper price and so the wealth transfer from the gambler to the conservative :)
     
  18. Scott No Mates

    Scott No Mates Well-Known Member

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    Start a class action against the bank claiming that it's discriminatory and prejudicial.
     
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  19. Daves2074

    Daves2074 Member

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    If you fix an interest only loan and then bank raise interest only rates as they have been. Does that raise all interest only loans including fixed loans? Or only on variable? Thx
     
  20. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    No it does not raise them - a fixed rate is just that - fixed. Any changes will not impact it's rate.

    Do note however when that fixed rate expires it will enter into the current rate environment so all those changes will take effect.