One of Australia’s largest non-bank lenders has announced a fresh home loan offering for property investors.
Firstmac has this week launched an investor package that extends its owner-occupier rate, starting at 3.79 per cent, to the investment loans of customers who bring the lender both their home loan and investment loan.
National sales manager Jake Sanders said the offer removes the usual premium that borrowers had to pay across the industry for investment loans.
“We want people with both a home and an investment property to come to us, so we are offering a market-leading rate on their investment property loan to encourage that,” Mr Sanders said.
“Paying a higher interest rate for an investment property loan is a genuine frustration for borrowers, so we think this package is going to get a lot of attention from brokers and their investment clients.”
Firstmac typically charges a premium of 20 basis points on investment loans.
Non-bank lenders have seen a significant increase in broker-originated home loans in recent months as Australian banks continue to operate under APRA’s 10 per cent growth cap.
Mark Davis from the Australian Lending & Investment Centre (ALIC) recently told The Adviser’s Elite Broker podcast that non-banks’ pricing and rates have “become more relevant in the last six months”, and are particularly attractive for loan repricing.
According to the elite broker, the current lending environment and associated low interest rates make it attractive for customers to switch to a lower-rate mortgage.
However, he revealed that many of the major banks “hit the roof” when brokers reprice their books, as they are “taking [the banks’] margins away from them”.
“We’re now in a situation where you have to reprice or lose your clients, so it’s a bit of a catch-22,” explained Mr Davis.
“Obviously we can’t advise what the rates are going to do, but my gut feel[ing] is … the banks are going to continue to be harder to work with, as far as getting a deal to happen.”
Liberty Financial recorded an increase in investor home loans over the 2016 financial year, with CEO James Boyle revealing that two key segments have been responsible for the surge.
“One was mum and dad investors looking to borrow for an investment property, and the other was a segment of professional investors who might have multiple properties and invest through trusts and various other vehicles,” Mr Boyle explained.
“They are more focused on wealth creation. We have seen growth in both of those areas over the last 12 months and it really hasn’t abated. That’s definitely been part of our growth story over the last 12 months,” he said.
The non-bank sector has largely benefitted from APRA’s regulatory efforts to curb investor lending, according to Mr Boyle.
“When those changes occurred it definitely created a platform for those lenders able to operate outside the banks and offer customers solutions for their needs. Because the needs didn’t change, but the banks’ appetites did. The non-banks were the beneficiary of that,” he said.