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ING, Citi reduce investor rates

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Annie Kane 3 minute read

The two non-major banks have announced that they are reducing interest rates on a range of new-to-bank investor loan applications.

ING has announced that, from today (23 October), investor rates will decrease for new customers.

The investor variable rates for loans between $150,000 and $1 million will decrease by 50 basis points. The lowest variable rate will be 2.69 per cent for new customers with a Mortgage Simplifier paying principal and interest on a home loan with a loan-to-value ratio (LVR) less or equal to 80 per cent of the property value.

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The Orange Advantage loans will also drop by 50 basis points to start from 3.08 per cent (principal and interest).

Meanwhile, the two-year and three-year fixed rate loans will decrease by 0.45 per cent, making the lowest available investor fixed rate 2.49 per cent (for those paying principal and interest), or 2.69 per cent for those paying interest-only.

ING’s head of third party distribution and director mortgages, Glenn Gibson, commented: “While our primary focus remains on owner-occupier loan, the current market conditions provide us with an opportunity to expand our investor loan offering.”

Citi also recently changed its rates, dropping fixed rates by up to 30 basis points for longer-period terms.

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The three-year mixed home loan for investors paying P&I now starts from 2.39 per cent, with interest-only being 2.59 per cent.

Citi’s Basic, Standard and Offset product variable rates have also reduced for owner-occupier and investor applications on both principal and interest and interest-only repayments, with the lowest variable mortgages for investors paying P&I starting from 2.79 per cent.

Investors look to refinance, use brokers

The move come hot on the heels of a new survey from the Property Investment Professionals of Australia (PIPA), which revealed that 36 per cent of investors would consider moving their portfolio to take advantage of interest rates just half a percentage point lower than their existing home loans.

The 2020 Annual Investor Sentiment Survey found that 65 per cent of investors would consider refinancing for an interest rate differential of up to one percentage point.

Commenting on the findings, Peter Koulizos, PIPA chairman, observed that the current record-low interest rate environment is encouraging investors to seek better home loan deals.

“Investors have had to pay unfairly high interest rates ever since they were unnecessarily targeted by APRA a number of years ago,” Mr Koulizos said.

“Investor and interest-only interest rates have reduced over recent times but are still significantly higher than owner-occupier home loans.

“Many investors are also coming off fixed rates and are refinancing to obtain rates that are one or, sometimes, two percentage points lower than what they had been paying.”

Mr Koulizos also noted that the majority of investors used brokers to secure finance over the past year, and 80 per cent of investor respondents said they would use a broker to secure finance for their next property purchase.

“Fewer than 10 per cent of investors indicated they would secure finance directly from a bank for their next investment property loan,” Mr Koulizos said.

[Related: Citi predicts broking industry to thrive]

ING, Citi reduce investor rates
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Annie Kane

Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Email Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

 

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