Higher rates for investors the right thing, says major bank

by AB11 Sep 2015
A high-level official of one of Australia’s biggest banks believes banks are doing the right thing by hitting investors with higher interest rates compared to owner occupiers.

NAB’s head of personal banking Gavin Slater said it made sense for investors to face higher interest cost than home owners due to their differing priorities.

Following the recent efforts by APRA to slow down investor lending, a number of banks have responded by hiking rates on investor loans. The increases have been mostly around 0.3% and were described as “unfair” by the Property Investment Professionals of Australia (PIPA).

“Increasing borrowing costs for investors, and in some cases owner occupiers, who bought into the market some time ago seems unfair and detracts from what should be the common goal of creating a balanced property market,” PIPA chair Ben Kingsley said.

But Slater said the moves were a necessary step the banks needed to take given the current economic climate.

“From a property investor point of view, conditions are, particularly in recent times, very favourable," Slater said in an interview with Fairfax media outlets

“Our perspective is that you look to the future, at some point interest rates will go up, and [we are] recognising that now is a really appropriate time to adjust our pricing to reflect what we believe is the underlying risk in that book,” he said.

With the slowdown of investor lending seemingly well underway, Slater also said the NAB and other lenders would be ramping up offers to entice owner occupiers looking for finance.

“It probably feels more competitive than it ever has been, because all the lenders now are really going hard at the owner-occupiers, to offset the flows around the investor book,” he said.


  • by Wozza 11/09/2015 9:09:45 AM

    With the majority of investors negatively gearing their properties, surely this increase will have minimal impact on their bottom line ?

  • by Peter Cooper 11/09/2015 9:43:24 AM

    As a responsible lender, investment loans are now being assessed on a principal and interest basis at a much higher servicing rate. If the customer passes much tougher hurdles and the customer gives the bank additional security, why should they be penalized with a higher retail rate?

    If the customer is an existing customer with sound record of payment, why too are they also being penalized? If you are behind in your repayments you are charged a higher rate until it is returned to order! If they have concerns with certain demographic areas restrict loan to value ratios on those areas to 60/70% and put other areas on watch.

    If clients pass the tougher criteria they deserve the better rate. If the bank has concerns about their 10% restriction in regards their loan book, they should put their hand up and say they have reached their quota and concentrate on other areas for business growth (of which there are many, particularly in business, corporate lending, and financial planning)!!

  • by Broker 11/09/2015 10:11:14 AM

    What an absolute croc, I also note that Mr Slater did not comment on NAB's recent rate gauging of owner occupiers with interest only loans - due to NAB's out-dated IT systems...