Mortgage customers hit by interest rate hikes but one type of borrower is the real winner
HOME-loan customers continue to get hammered by interest rate hikes but there’s one type of borrower that is the real winner.
HOME loan customers are being forced to pay higher interest rates and stump up fatter deposits as banks increase mortgage charges — however, one type of borrower remains exempt.
Owner occupiers opting to pay down their debts and make principal and interest (P & I) repayments remain the biggest winners of the competitive mortgage market.
New market analysis shows for an owner occupier paying P & I on a $300,000 30-year home loan the average variable rate is 4.45 per cent, compared to investors paying P & I at a rate of 4.89 per cent — the equivalent of nearly two full rate hikes.
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The monthly repayments are $79 more a month for investors or $948 a year than owner occupiers, the data by financial comparison website Mozo has found.
And for investors opting for interest-only loans they are getting hit the hardest by paying an average variable rate of 4.99 per cent, making their repayments $1248 but they are failing to pay down their debt.
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Mozo spokeswoman Kirsty Lamont said owner occupiers who are paying down their debts will almost always secure better rates than those with other types of loans.
“They are still enjoying rock bottom interest rates that can be less than 3.5 per cent which is a big difference to the investor end of town,’’ she said.
“We have seen large increases to rates on investor loans and interest-only rates as a result of APRA’s crackdown because they are perceived as riskier loans.”
The banking regulator, the Australian Prudential Regulation Authority, has forced banks to hike rates on interest-only lending and also demand borrowers have fatter deposits to reduce the risks of borrowing money.
Rising Tide Financial Services’ lending specialist Sam Gawenda said all mortgage customers needed to take action to score a better deal.
“I would suggest calling your lender to see if they can sharpen their pencil on your home loan,’’ he said.
“If you are getting a rate under four per cent this certainly is competitive especially if it is an investment and/or interest-only loan.”
Ms Lamont also said there are many smaller lenders who are prepared to offer cheaper loan deals than the big four banks as the compete for new business.
sophie.elsworth@news.com.au