Article from API Australians have always had a regrettable relationship with the Big 4 Banks. Rarely do I hear consumers raving about the 'amazing' experience they had at their local branch or how 'fairly' they've been treated when looking at recent fees and changes on their account! However, the reality is around 80% of us bank with the Big 4 and as we've seen with the royal commission, they're essentially too big to fail. But while the above holds true, the home lending landscape is a forever changing beast and through technology and competition, I don’t think this will always be the case longterm. Specific to investors, there’s even a case this may evident right now. Recent data from Australian Finance Group’s (AFG) latest mortgage and competition index has shown that in the three months to 30 September, the share of investor lodgements to the Big 4 Banks slipped from 56.2 per cent to 50.2 per cent. When compared to the same quarter in 2018, the major banks’ investor share is down from 57.1 per cent. So why is this the case? Well, from what I’m seeing on the coalface, there are three reasons which may explain what’s happening in the market. 1. Non-major interest-only rates are fantastic For the past four years after APRA made sweeping changes to the investor landscape, both investor and interest-only rates have been significantly higher than owner-occupied and principal and interest rates. However, when APRA removed all their restrictions earlier in the year, the gap between principal and interest and interest-only repayments has been slowly reducing. I’m now once again having discussions with clients about how interest-only loans can play an important role in managing their cashflow. Currently, many non-major banks only have a 0.1-0.3% difference between their interest-only and principal and interest rates. The majors have been slow to move on this and their appetite towards interest-only loans, in general, is not as positive as it is with the non-majors.