Spread is dead
Lenders are quietly getting hungry for interest-only (IO) loans again.
As expected this will mainly be promoted through mortgage broker channels.
As expected this will mainly be promoted through mortgage broker channels.
But appetite is only really set to ramp up for investors.
It's likely that owner-occupiers will be best served to stick to P&I loans, by and large.
Having been as wide as the Hancock Gorge, the gap between interest-only mortgage rates and those on offer for P&I loans is now being quietly shuttered for investors.
And this will signal a sensible but meaningful return to IO lending.
IO loan volumes had been clonked by a mortgage rate differential and other lending restrictions, but from Q2 2019 onwards things should begin to loosen up a little.
This is welcome news, and frankly not before time for a misfiring housing market.
It will also take some of the pressure off the huge switch across from IO to amortising loans.
Suncorp's latest offering via brokers includes a 3-year fixed rate IO investment product from 3.69 per cent, which is exactly the same rate of offer for its P&I equivalent product.
It's even possible to get below 3½ per cent for P&I owner-occupier loans, too.
Westpac is also offering 3-year fixed IO loans at a tick under 4 per cent.
Westpac is also offering 3-year fixed IO loans at a tick under 4 per cent.
Commonwealth Bank, meanwhile, has stolen a march on its competitors by slashing its mortgage rates over recent days.
This jockeying for investment loans and lower rates will all be good news for the Federal Budget and will in turn reduce the share of negatively geared investors down to the lowest level in about 15 years.
This jockeying for investment loans and lower rates will all be good news for the Federal Budget and will in turn reduce the share of negatively geared investors down to the lowest level in about 15 years.
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