Interest rates for investors are finally heading south: Mozo.com.au

Interest rates for investors are finally heading south with the average investor principal and interest rate dropping 35 basis points, according to financial comparison site mozo.com.au.

Falling from 4.76% to 4.41% following consecutive official rate cuts and changes to the APRA cap.

On average an investor with a $300,000 loan taken over 30 years will be $63 a month better off following the cuts.

Mozo Property Expert Steve Jovcevski said, “the RBA’s decision to cut 50 basis points off the official cash rate this year and the removal of the APRA cap on interest only loans has warmed up the paddles of life for property investors."

“It’s encouraging that as well as rate cuts for investors paying principal and interest, we’re seeing a downward movement on interest only loans."

“This time two years ago property investors were staring down average interest only rates of 5.12% and lenders were handcuffed around the volume of loans they could issue by the APRA cap," he added.

Following the RBA’s action on rates this year, Mozo found Westpac made the most significant cuts of the Big 4 banks slicing 35 basis points off its investor interest only rate in June, and 30 basis points in July.

CBA wasn’t far behind with two full 25 basis point cuts.

Jovcevski says, “while this rate relief is welcome news for investors, compared to owner occupiers, they are still in the hurt locker. At a time when rental returns are under pressure, it’s still difficult to lay a solid foundation for investing in property."

“Considering the current average investor interest only rate of 4.52% is still higher than it was before APRA introduced its cap in 2017, the investor loan market still has a lot of room to move in the coming months," Jovcevski concluded.