1 March 2016

Portfolio Capital - Mortgage Market Wrap

by David Harris, Portfolio Capital Pty Ltd

Late last year I talked about the changing nature of the mortgage market, particularly in respect to changes brought about by the Australian Prudential Regulation Authority (APRA).  Well, the market is still constantly changing, however, we are seeing a few lenders loosen up on investment lending ratios and implementing some reductions in investment lending rates.

We are also seeing the creation of some very innovative lending products - some of which few consumers are aware of and are unlikely to come across themselves.  This is where working with an up to date, licenced mortgage broker can often help to maximise returns on your investment properties.

For example, while investment lending rates can be significantly higher than lending for owner occupied properties there are some lenders providing owner occupied rates for investment properties if your borrowings for both properties are with them.  Even more innovative is a recently announced offering by an award winning lender.

Purchase or refinance your owner occupied and investment property through them and you'll get a rate of 2.5% (that's not a typo), Comparison Rate ^*2.55%, on the home loan as long as the value of the investment loan is equal to or greater than home loan.  Sure, the Investment loan is dearer at 5.5%, comparison rate ^*5.54%, but the combined rate at a fifty/fifty split is still only 4.07%.  Not only that but the higher investment rate is the one with the tax deductibility.

I hasten to add that this product may not be suitable for everyone.  Long-term plans need to be considered carefully to ensure that the potential benefits are achievable and regular annual or bi-annual reviews would be important.  However, it does demonstrate some of the innovation going on outside of the 'Big 4', innovation that provides significant opportunities for borrowers.

It is this type of competitive and changing market that brings mortgage and finance brokers into their own.  With the broker share of the mortgage market tipped to exceed 60% this year (The Advisor, 23 Feb 2016) brokers represent a strong force for innovation and change and are powerful advocates for consumers - their clients.

Want to review your loans and see if we can save you?  Give us a call, send an email or visit us online.  We'll give you reliable, honest advice on your borrowing options - and we don't charge a fee for this service.

Email: info@portfoliocapital.com.au |Phone: 07 31391372 | Web: www.portfoliocapital.com.au

^*The comparison rate is based on a loan of $150,000 over 25 years. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

The contents of this article are of a general nature only.  They should not be construed as financial or other advice as individual circumstances have not been considered.