30 Mar 2017

We hate to be the bearer of bad news but if you are a Commonwealth Bank customer with an investment loan, your interest rate is about to rise.

We hate to be the bearer of bad news but if you are a Commonwealth Bank customer with an investment loan, your interest rate is about to rise.

From April 3rd, all interest only investor rates will increase by 0.12% with principal and interest loans not being affected.

Given that the majority of investors pay only interest, this means most will be impacted.

Why is this happening?

In recent years APRA (The Australian Prudential Regulation Authority) who oversee banks and other financial bodies, have maintained that a lenders’ annual growth in investor loans should not exceed 10%.

In the 12 months leading up to 31 December 2016, CBA’s investor lending grew significantly more than the growth of the other three major banks. This increase, along with CBA not accepting new investor refinances, has been introduced in an effort to stem further growth.

What can we do about it?

Option 1 – Opt to pay principal and interest

Firstly, and probably not the preferred option for most investors, you can opt to pay principal and interest to dodge the increase.

CBA have made an easy “opt in” for those wishing to do this by way of a request through NetBank.

If you would like to revert to principal and interest, just logon and accept the adjustment.

Option 2 – Ask us if we can request an interest rate discount

Alternatively, your Blackburne Mortgage Broker may be able to go into bat for you and request an interest rate discount on your loans to mitigate the impending rate rise.

While we have seen great results from doing this for our clients in the past, it’s ultimately up to the bank as to what discount, if any, they are willing to offer as it’s on a case by case basis.

However if you don’t ask you don’t get, so we recommend that you let us know as soon as possible if this is something you would like to pursue.

Option 3 – Look at other lenders

Finally, there is always the option of looking at other lenders and determining if there is a more preferable alternative available.

The lending landscape is particularly volatile at present and even with the recent rate rises we’ve seen there are still many competitive deals in the market with lenders that want your business.

Even when the rates rise, we can still find you a great deal. Contact Blackburne Mortgage Broking on +61 8 9429 5794 and ask to speak to Paul Prindiville, Mortgage Broking Team Leader, or complete the enquiry form below.

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