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Competition heats up for investor, IO loans

competitive competitive
Staff reporter 5 minute read

A Sydney-based financial services group has said that investor and interest-only offerings are becoming increasingly competitive.

Omniwealth Mortgage managing director James Grima said that lenders, for the first time in many months, are starting to compete more aggressively for investor and interest-only loans.

“This is a very competitive part of the lending market, with the non-bank lenders providing the lowest rates,” Mr Grima said. “The current interest rate environment is a good opportunity to review existing loans and possibly refinance to another lender offering lower interest rate.”

According to Omniwealth, the improved conditions for purchases have been influenced by the tightening of lending policies over the past 12 months, along with the restrictions that APRA have put on lenders in respect to IO and investor home loans.


“While it is certainly more difficult to obtain a loan today than 12 months ago, lending conditions are still favourable, particularly for borrowers that are purchasing a home with principal and interest repayments,” Mr Grima said.

The managing director added: “The focus for lenders this year has been on interest-only and investment loans in response to regulatory caps on growth set by APRA.

“Earlier this year, there were across the board interest rate increases for clients with interest-only repayments and investment loans; however, the rates on these loans are softening due to many lenders now meeting the regulatory caps.

“Lenders are offering very attractive rates (fixed and variable) for principal and interest loans secured by owner-occupied property. Lenders are also willing to negotiate better rates for investment loans that have principal and interest repayments.”

[Related: Borrowers bargaining for better mortgage deals]


Competition heats up for investor, IO loans
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James Mitchell

James Mitchell

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.

He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.

James holds a BA (Hons) in English Literature and an MA in Journalism.



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