Variable	1 Year Fixed	2 Years Fixed	3 Years Fixed

Company	Product	Rate %	Go to Site
	Standard Variable	6.39
	SuperStar	6.47
	Premium Plus Pkg <$500k	6.49
	Budget Home Loan	6.52
	EasyStart	6.54

These variable rate home loans are ranked by interest rate on balance of $250,000.

Company	Product	Rate %	Go to Site
	Great Rate HL 1-12m fxd	6.69
	1 year Fixed	6.74
	1 year Fixed	6.79
	1 Year Fixed	6.79
	Fixed ProPack1 1yr	6.79

These 1 Year fixed rate home loans are ranked by interest rate on balance of $250,000.

Company	Product	Rate %	Go to Site
	2 Year Fixed	6.79
	2 year Fixed n Easy	6.95
	True 2 year Fixed	6.99
	Fixed ProPack1 2yr	6.99
	Great Rate HL 13-24m fxd	6.99

These 2 Years fixed rate home loans are ranked by interest rate on balance of $250,000.

Company	Product	Rate %	Go to Site
	3 year Fixed	6.89
	3 year Fixed n Easy	6.97
	Classic 3 year Fixed	6.99
	Great Rate HL 25-36m fxd	6.99
	Fixed ProPack1 3yr	6.99

These 3 Years fixed rate home loans are ranked by interest rate on balance of $250,000.

5 Stars Mortgages - Variable Rate

Company	Product	Rate %	Go to Site
	Standard Variable	6.39
	Premium Plus Pkg <$500k	6.49
	Budget Home Loan	6.52
	Home Sweet Home Ln$250k+	6.75

These loans have low rates and offer things like redraw facilities and the ability to make additional repayments

This is an information service. By browsing on the website and/or using our search tools, you are asking RateCity to provide you with information about home loans from multiple financial institutions. We will try to show you a range of products in response to your request for information. We are not a credit provider, and in giving you product information we are not making any suggestion or recommendation to you about a particular credit product. If you decide to apply for a home loan, you will deal directly with a financial institution, and not with RateCity.

Time to buy your first investment property?

There are many positive signs that it’s a good time to start investing in residential real estate.

By Jackie Pearson
24 June 2009

You own your home outright, or have a very small mortgage. Your super is chugging along nicely; and your job is secure.

First home buyers have had their turn and now the planets are lining up for investors looking at direct residential property as a way to diversify risk and earn a positive return.

President of the Real Estate Institute of Australia, David Airey, says there are definitely signs that the market is improving for investors.

“Auction clearance rates have been very good for the last three weekends with over 80% of listings sold in Melbourne and Sydney and usually an improvement in the Sydney market runs through to the whole nation,” says Airey.

residential property can diversify risk and earn you a positive return

Image by mike.wilson

Competition for houses
Airey says investors are being forced to compete with first home buyers who have been buoyed by the boost.

“First home buyers and investors do collide. First home buyers are looking for properties that are cheap and easy to finance. Investors are looking for properties that are cheap and will get a good rental yield,” he says.

Currently because of the Boost, first home buyers represent 40% of all residential property sales in Australia when, according to Airey, they usually only account for 15%. He says there are now signs the first home buyer market has reached saturation point and there will be a steady increase in second-time purchasers and investors returning to the market.

Good rental returns
The yields received from rented properties have been improving in most capital cities for the past two to three years, according to the REIA’s David Airey. This has been due to a combination of higher rents and lower housing prices.

“A typical $400,000 house has been selling for closer to $350,000 and a typical $350 per week rental property has been pushed up to $400 per week, as a result yields have improved,” he says.

According to REIA research, based on median house prices and median rents, investors in six of the eight capital cities can expect a positive return (based on a 25% deposit and an interest-only loan).

Steady interest rates
Airey says cheaper interest rates have made it easier to finance investment properties, however, we can expect to see more edging up of rates by the big banks (who control more than 90% of Australia’s mortgage business).

Even though the Reserve Bank of Australia will be keeping a “watchful eye” on interest rates and has another 0.25% reduction “up its sleeve” Airey doesn’t believe the banks will pass on any more rate cuts to borrowers.

Whilst rates remain comparatively low Airey says you will need a 20-25% deposit, and need to be able to prove your capacity to service the loan as lenders will be looking for “certainty of rent”.

Get advice
“I think people particularly in their 30s and 40s can look at using their home equity to finance an investment property but they should get independent tax advice and assess their ability to service a debt, service any shortfall in the debt and live within a budget.

“The aim should always be for an investment property to be positively geared – that is for rental to cover the loan repayments and other expenses and then provide a profit – but most investment properties are negatively geared for the first two or three years and that means you have to be able to service the shortfall,” says Airey.

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