Interest only investor rates

Have just seen that Westpac has a 2.39% 2 year interest only rate investment for lending up to 70%.

Anyone else seen anything decent from the big 4 on fixed interest only investment.

Cheapest variable interest only investor is 2.99% I believe, with most in 3's.

 

Of course the issue of what the repayments under P&I may be at the end of the fixed term should be considered. It may balloon future repayments against the remaining term of 28 years

eg 28 years of an extra $100 pm approx for a $500K loan (subject to future rates)

 

Westpac is pretty hot right now.

Won't suprise me if the other majors follow soon.

 

Been doing some research on this lately. Best I've found have been UBank at 2.24% fixed for 3 years or homeloans.com.au (60% LVR) and Reduce Home Loans at 2.59% variable. Never been with any of them so can't comment on how good they are.

 

I'm really curious to see what will happen in a few years in situations like this. If people start forgetting we are on really low interest rates and overextend themselves, rates rise in a few years plus turn to P & I they could be in for a lot of trouble and be forced to sell. I think it would be wise to keep this in mind and maybe sell one property as a buffer when rates start to rise.

All of my loans are now P & I except one that I plan on selling in a couple of years.

NAB have offered me the same rates as mentioned by OP!

 

Yep... classic conundrum for the RBA and APRA is rapidly taking shape; On the one hand, the low rates are considered necessary by the RBA (and rightfully so) to try and lower unemployment and fuel activity... on the other hand, it's clearly driving up asset prices., which APRA may have to take action against ( also rightfully so) if it gets too frothy and starts creating risk in the banking system...

 

They were talking about this very point on the Switzer show a couple of weeks back. The sting in the tail of a fixed rate loan! People might go all out with the research and comparables in the beginning and then become complacent later when the loan is all going swimmingly.

 

LVR & DTI data already starting to tick up.

There will be 'rough guides' that they haven't disclosed that they view as trigger points for action. Still a fair way away, but lending data is being watched much more closely across the market atm.

 

Increasingly I think a small increase to assessment rates for loans above 80% LVR would be prudent. Nothing as dramatic as a return to 7% P&I , but perhaps the addition of 25 -50 bpts to assessment rates for loans above 80% LVR for example. Small, surgical "tweaks" ,so to speak.

 

Very clever.
I think they'd just do this by capping DTI's above 5-6 (pick a number) for anything above 80.
Skinny servicing + high lvr loans - not too pretty.

APRA do review portfolio balances of high DTI loans exposures of banks. Sydney/Melb dominate these given higher values to income levels.

Bigger players can offset this as a % because of their reach across the country, but banks focussed on these markets can have some quirky rules around DTI's to keep inside APRA guidance.