Iden Group has launched a new white-label offering that it describes as “probably the best lending innovation that has happened over the last decade” for owner-occupiers with an investment loan.
The non-bank lender has partnered with Loan Reducer, an online calculator designed to provide borrowers who have an owner-occupier loan and an investment loan with a lower home loan rate by leveraging the investment interest rate against the lender’s desired total return on funds.
The calculator operates with a ceiling rate on the investment loan (the Reserve Bank’s cash rate plus 3.5 per cent) and a floor rate on the owner-occupied loan as low as 2.5 per cent (RBA cash rate plus 0.5 per cent).
Loan Reducer also enables a lender to set their required interest rate return – arriving at the level of discount possible on the owner-occupied loan and the interest rate in the investment loan.
Iden Group director Barrie Gaubert said the lender is now able to offer variable rate discounts as low as three per cent for owner-occupier loans, and is also able to reduce the rate on investment loans for many borrowers as a result of recent pricing changes by the banks.
“It’s interesting because all the investment loans from the banks are now easily above 3.5 per cent on the RBA cash rate, so we’re actually able to cut the rate on the investment loans as well for a lot of borrowers,” he told The Adviser.
“For those who have a home and investment loan, it is probably the best funding innovation that has happened over the last decade.”
Mr Gaubert said the response from brokers and borrowers towards the group's new offering – branded as Rapid Home Loan Reducer – has been fantastic.
“One broker said he had 97 per cent of his clients benefit from the new product, and for the remaining three per cent, it wasn’t worth their while because they had really sharp fixed rates,” he said. “Even then, the broker said it would become worth their while because they would eventually come out of the fixed rates.”
[Related: Loan Ave to offer 3% variable rate discounts]
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