The interest rate rises on investor loans can represent an opportunity for brokers, according to a leading aggregator.
Last week, ANZ
Bank all announced increases of 27 basis points on variable rate investment loans, as well as a raft of fixed rate increases ranging from 10 basis points to 40 basis points. This week, NAB
announced rate increases on interest-only home loans. Brokers and consumers are now awaiting the response of the last remaining major bank, Westpac.
According to statements from the lenders, the decision was made to balance the mix of lending between owner-occupied and investment and to ensure investment home loan portfolios remain below APRA’s 10% growth limit.
Many market analysts are also speculating that the rate rises are in response to APRA’s capital raising announcement. Last week, the banking regulator announced that the major banks will have to hold more capital against money lent out for residential mortgages, increasing the average risk weight on Australian residential mortgage exposures from approximately 16% to at least 25%.
However, eChoice general manager of sales and distribution, Paul Liccione says these rate hikes can present an enormous opportunity for brokers.
“An event of this nature highlights a prime reason brokers exist. That is, to deliver better quality outcomes for consumers in relation to the choice of their mortgage product. And with access to a wide variety of products from lenders both large and small, brokers are in the box-seat to deliver even more value to borrowers as the playing field changes.
“Brokers already account for more than fifty percent of mortgage system growth and I have no doubt this figure will increase as even more consumers choose to partner with a broker to find a more effective loan solution for their particular circumstances.”