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APRA throws property investors a lifeline with benchmark removal

An announcement from APRA to remove the investor loan growth benchmark will see some banks cut investor rates to lure back more investors into the lucrative sector.

Banks introduced higher rates for investor loans following the introduction of the cap on investor lending, announced in December 2014.

Today, RateCity.com.au data shows the gap between owner-occupiers paying principal and interest and investors paying interest-only is 73 basis points.

Owner occupiers, principal and interest:              4.29%
Owner occupiers, interest-only:                            4.70%
Investors, principal and interest:                           4.72%
Investors, interest only:                                         5.02%

RateCity spokesperson Sally Tindall said today’s announcement could see some banks cut rates for investor lending.

“We’ve already seen the some of the major banks move rates down for investors paying interest-only,” she said.

“We believe more banks will follow in their footsteps to reclaim some of the investor market.

“The banks will never go back to the same prices for all borrowers – those days have well and truly passed – but we will see some prices shift back into investors’ favour,” she added.

Investor lending has fallen as a result of APRA interventions over the last three-and-a-half years.

At the time the caps were introduced in December 2014, investors accounted for 45 per cent of all new borrowing compared to just 35 per cent in February this year.

APRA’s announcement today also highlighted the need for greater scrutiny of customers’ ability to service a loan, confirming it is the next battleground for the regulator.

“The Royal Commission has put an uncomfortable spotlight on serviceability requirements that the banks can’t ignore,” she said.

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