Granite, the non-bank lending brand owned by ColCap Financial, will launch a 40-year home loan from 6 October and pass on only part of the Reserve Bank's (RBA) latest cash rate increase to new loans.
The changes follow the RBA's 29 September decision to lift the cash rate by 25 basis points to 4.6%, with brokers warning that the latest rate hike may have sharply reduced how much first-time buyers can borrow.
The new 40-Year Extended Home Loan is open to both owner-occupiers and investors. It offers full 40-year terms to owner-occupiers aged up to 45, and loan-to-value ratios (LVRs) of up to 95% including risk fees. It can also be used for construction.
Serviceability is calculated over a maximum of 35 years, which can stretch a client's borrowing capacity further.
That matters as higher interest rates weigh on borrowing capacity, according to PropTrack, with home prices falling for a sixth straight month in September.
Owner-occupiers can take up to five years of interest-only repayments, and investors up to 10 years. Eligible pay-as-you-go (PAYG), self-employed, company and trust borrowers will also get an offset facility, redraw, and unlimited extra repayments.
Michael Csavas (pictured), chief commercial officer at ColCap Financial, said that in the current market "brokers know their clients are facing challenges in achieving the property they want". He also said the extended investor interest-only option may help clients with tax planning after recent changes to how property investors are taxed.
Instead of matching the rise, Granite will add 0.05 percentage points to standard investment loans with an LVR of up to 80%. It will add 0.15 percentage points to standard owner-occupied home loans.
Above 80% LVR, rates will either stay where they are or fall by as much as 0.65 percentage points, depending on borrower type, LVR band, and product.
Granite is raising its maximum loan size for self-managed super funds (SMSFs) from $3.5 million to $5 million, for both commercial property loans and residential refinances.
Granite noted that SMSFs can no longer buy new residential property under changed borrowing rules. Csavas said more funds were turning to commercial property as a long-term investment.
SMSF borrowers also avoid the full rise. Only 5 basis points will be passed on to residential refinances, and all SMSF commercial rates will move by less than the central bank's increase.
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