Over the past few months, we have noticed a string of changes in relation to home and investment property interest rates - particularly in relation to Interest Only Home Loans.
Why has this happened?
Some lenders, such as the ‘Big Four’ banks have increased the interest payable on ‘Interest Only’ home loans in response to regulatory pressure and changes introduced by the Australian Prudential Regulatory Authority (APRA), which is the authority that governs most financial institutions in Australia. In some cases, home loan interest rates have increased by as much as 0.59% p.a.
How this will affect you:
These changes will affect you by increasing the amount of Interest payable on your loan. This means your monthly repayment will be higher. This also means that your lender may, going forward, offer you less flexibility when it comes to renewing your Interest Only repayment period.
What you need to do:
Now, more than ever it is critical that Home Owners and Property Investors remain on top of their Interest Rate. Lenders are not always forthcoming with notifying us about changes to our loan repayments, and it can sometimes be easy to disregard communications from the banks. This could be costing you a considerable amount in unnecessary repayments.
You should chat to your Mortgage Choice Broker, or speak to your bank to find out how your loan has changed, or how any planned changes will affect you.