The Australian Prudential regulator APRA, has tightened the screws on banks lending to investors by imposing caps on investment lending as well as Interest Only loans.
These restrictions will surely impact on existing investment borrowers, as rates rise and for new investment lending as stricter lending criteria are applied.
Lenders have already imposed rate increases on investment loans ranging from 0.15% to 0.39%. On a $500,000 loan a 0.39% increase means an additional $1,950 per year or $163 a month in interest repayments.
Owner occupied rates are also increasing, however increases on these loans has typically been around 0.10%, still a $500 increase in yearly interest on a $500,000 home loan.
We recommend that mortgage holders, either investors or owner occupiers have an annual home loan review, to ensure that your loan is still the right option for any changed circumstances you may have experienced, as well as making sure your interest rate is the lowest it can be.