Gap between rates for investors and owner occupiers widening: RateCity
In the December quarter, the gap between rates for investors and owner occupier borrowers widened, with investors now paying 0.21 per cent more on average, RateCity report.
Despite higher rates for some investors, overall mortgage rates fell for both variable and fixed, with the largest cuts applied to the 3-year fixed rates.
"Interestingly, fixed rates – including 5-year terms – are more competitive than variable rates on average and the gap is widening, making fixed rates an appealing option for some people now," RateCity money commentator Sally Tindall noted.
"However, competition in the variable space is driving sharper deals than fixed.
"For example, variable rates are sitting as low as 3.69 per cent, while one of the lowest 5 year fixed rates is 4.39 per cent," she said.
She noted home loan rates have gone both up and down in the space of three months.
The major banks all chose to hike rates by an average of 0.18 percentage points on the back of APRA’s requirement that they hold more capital while competition at the bottom of the market sharpened with around 25 lenders choosing to cut their lowest variable rates to as little as 3.65 per cent.
"Unsurprisingly, existing mortgage holders primarily missed out on this news as the majority of these cuts were for new customers only.
"The most dramatic change occurred in investor borrowing where there was a $2.1 billion drop in lending figures in just four months.
"The falls came on the back of the introduction of higher home loan rates for investors of up to 1.44 percentage points, with around half of the market adopting this two-tiered pricing structure.
"We expect lenders will continue to tweak their home loan products in the year ahead in an attempt to reduce risk and control investor growth including a continued tightening of LVR requirements."
