Investors are disappointed and worried after interest rates rise on investment loans. They are reconsidering their ties to the big four banks and seeking better rates from lenders. It’s a competitive industry and refinancing could save you thousands.

Whilst most economists are predicting moderate rises in mortgage rates and a gradual slowdown in housing market growth this year, borrowers should reassess their situation and make sure they are getting the best deal. Housing prices are increasing and we need to take into regard investment returns as the rental market seems to be showing signs of low rental yields.

There are a few key factors we need to consider before property investing:

supply and demand -Anyone looking at living at the Mornington Peninsula would have realised there is high demand and property prices are still rising steadily. Mornington’s median property price is $736,250 and rental average $450 per week.

the cost of credit – Interest rates for investors are creeping up and don’t forget to consider other varying fees that may be involved in borrowing.

access to credit – this will depend upon your deposit and ability to make loan repayments as well as insurance. Lenders need to comply with responsible lending obligations and they will consider your circumstances to provide you with products that meet your financial capacity.

and

employment levels – According to the Australian Bureau of Statistics, Australia’s jobless rate is steady at 5.8% in February 2017.

Last week APRA (Australian Prudential Regulation Authority) notified lenders of new restrictions on interest-only mortgage loans. The decision was supported by Treasurer Scott Morrison saying, “I have remarked upon the relatively high proportion of interest-only loans on housing lending and I welcome APRA’s tightening of lending standards in that area”. This is a clear indication that APRA along with lenders need to respond to what is happening in the market.

In spite of any home loan rate increases, home loan rates remain low, keeping the cost of credit at affordable levels. Investors certainly haven’t shied away from borrowing and property investments, they are simply doing their homework to take advantage of better deals.
Don’t set and forget! Review your investment loan and your mortgage. Our mortgage brokers can offer you a range of loans to suit your personal financial needs.