Heritage Bank have slashed 40 points off their investor rate, marking a huge move for the customer-owned bank.
Heritage will now offer as little as 2.29% on one, two and three-year fixed rate P&I loans for investors. The interest-only versions have an ever bigger cut, with the one-year option having dropped 50 points to 2.49%.
The news comes as banks scramble to react to the changes in the mortgage marketplace, which have seen first home buyers overtaken by investors in many parts of Australia.
“Heritage is committed to offering low rates to all of our members,” said Heritage Chief Customer Officer Kevin Potter. “We have just reduced some of our investment interest rates to help make these more affordable, such is the importance Heritage places on investment lending as part of our overall loan portfolio.”
“Customer-owned banks like Heritage don’t have shareholders, so operating in the best interests of our members is at the forefront of everything we do. Our focus is on providing members with great value across a range of banking products and outstanding service rather than generating big profits like the listed banks do to pay dividends to shareholders.”
For Potter, the ability to provide these low rates is a direct result of the business model that Heritage operates under, combined with the low price of money in the market.
“Due to the government stimulus and monetary policy in response to COVID, interest rates in Australia are at an all-time low so we’re in a position to pass on the benefits of this to borrowers,” he said. “As we’re a mutual, we’re happy to provide our members with the best rates we can.”
Despite the new rates for investors, Potter added that the traditional O/O mortgage was still their most popular: “The market is seeing an increase in investor loan activity, however, the majority of lending applications with Heritage are for owner-occupier finance,” he said.