Banks favour owner-occupiers with sharp offers

Banks favour owner-occupiers with sharp offers

Following today's decision by the Reserve Bank board to leave interest rates unchanged at 2 percent, new research from RateCity shows that the gap between investor and owner-occupier home loan rates is widening.

While in June the difference between owner-occupier and investor home loan rates was only 0.02 percentage points, the margin is now as high as 0.50 percentage points.

Peter Arnold, financial analyst at RateCity, said for the past decade and until recently owner-occupiers and investors have generally had the same deal on rates.

“On one hand, lenders are tightening criteria on loans to property investors and making it more expensive to borrow. The flipside of that is that owner-occupiers are being offered sharper deals in some cases,” he said.

RateCity data shows that 55 lenders have introduced differential pricing on mortgages in recent months, including the major banks, which have increased investor rates by up to 0.48 percentage points and cut owner-occupier rates by as much as 0.39 percentage points since 29 June this year (see table).

“We’re seeing most of the action from the major banks, which are the main ones with the regulator on their case. Though, increasingly, smaller lenders are following suit and overtime I think we’ll see the majority of lenders use this differential pricing,” he said.

“Risk-based pricing is something that’s been spoken about in the mortgage industry for about five years and LVR pricing is something we’ve seen a lot more of in that time. This is essentially an extension of that, which has been brought on by pressure from the regulator and the market heating up.”

Arnold added that some lenders had also introduced inducements to encourage owner-occupiers into the market, including St. George Bank’s $2000 sign up bonus.

“While the providers are trying to curb investor lending they are looking to rebalance their book back towards owner-occupiers and I think it’s something that we’ll see a lot more of over time,” he said.

Did you find this helpful? Why not share this article?

Advertisement

RateCity

Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the ratecity.com.au Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy

Advertisement

Learn more about nonspecific

Can I get a $1,500 payday loan with bad credit?

Yes, it may be possible to get a $1,500 payday loan with bad credit. Some payday lenders give loans to people with bad credit histories if they believe the borrower has the capacity to repay the loan.

Under Australia’s responsible lending rules, lenders aren’t allowed to approve $1,500 payday loans if they don’t believe the borrower can make the repayments.