Investment Home Loans - Change of Rates

Alight I'm furious, after negotiating with the banks less than 6 months ago for a 1.35% discount on the standard variable rate, Westpac have now come back and changed my loan from "Rocket Repay Home Loan" to "Rocket Investment Rate" which is 0.27% higher. I rang them and complained and they said its new government regulations that any investment property has to be on a investment rate. So therefore I cant have my investment properties on the cheaper Rocket Repay loan.

I'm not too happy and am not sure whether they are lying to me or whether there is a crack down on investment property loans. Any body know anything about this.

 

It's true, and it's not just westpac. You'll find you still have your 1.35% discount, it's just that it's discounted off a new, higher investment rate.

All the major banks have implemented similar rate hikes, so we all feel your pain

 

Sorry, but almost every lender has recently made similar moves. There's a handful of lenders that haven't, but even these are making some noises about it. There's virtually no chance of negotiating with the banks on this.

These changes have been heavily discussed in the finance forum of this website for several months now.

 

Won't matter what the size of the loan is you won't get away from the rate increase.

I would expect the smaller lenders who have not yet increased their rates to wait until they have had their fill of investment / interest only loans and then increase their rates accordingly.

Also don't expect lenders to pass on any future RBA cuts on investment loans in full.

New lending environment we are now entering into ..... or is it just a matter of going back to where we were in the 1980's.

 

They're not pulling your leg - this is happening across the board with a huge swathe of lenders putting their rates up on investors by 0.27-0.49%.

Price differentiation between owner occupier and investors will no doubt remaining for the time being, so people need to factor this into their finance numbers.

 

Yep, CBA have just done the same to me. A few months ago their rates were looking sweet. Now it tastes very bitter. Grrrrr

 

Very true words. About 5 weeks ago the Victorian state manager for The Rock Building Society was telling me that the regulators weren't really bothering them about lending practices regarding investors. They had competitive rates and there weren't any changes to their assessment policies. They weren't worried about APRA and stated that they didn't expect it to affect them.

A few days ago, The Rock increased their investment rates in line with other lenders.

I don't think quickly refinancing is going to do people much good. Certainly the competitive deals are with the less well known lenders, but in the long term they'll likely be a little cheaper, not significantly so.

As always, the best strategy moving forward will be to understand why a particular lender is appropriate for you and your strategy. Review this in light of the recent policy changes and make your decisions based on this. Remember that a 0.1% rate different is fairly negligible in cost when compared to the long term outcomes of a good investment strategy.

 

I'm sure there is a number of small lenders out there still offering decent deals compared to the major 4. However my friend is in the process of refinancing with BOQ (about 1 million worth of mortgage, 4 x IP's) fixed for 3 years at 3.99%. He approached the bank after they stopped offering this deal and they were happy to negotiate and it looks like its all going through as we speak.

 

APRA has not told banks to increase interest rates on investors. They have suggested that they look at raising more capital and to limit growth in investor loans to 10%. The banks have responded in their normal way and that is to increase margins on investor loans to increase profits. There are a lot of good economic commentators who have recently come out against what the bank have done.

 

Previously,
for every 1.25$ in capital, banks can lend 100$ for home loans

under basel III changes,
for every 2.5$ in capital banks can lend 100$

So If banks do nothing their profit from home loan lending will reduce by half.

 

Thanks for everybody's input, it makes me feel a little better knowing I haven't bee singled out.
Ill just grin and bear it, not much I can do by the sounds of it.
Cheers