Higher Interest rates for existing IP loans

[smallbuyer]

Hello,

Has anyone seen any attempts to remove discretionary discounts people already have on their IP loans or push rates up for existing IP's any other way?

Anything about higher fixed rates for IP vs PPOR if people want to fix existing IP loans?

Cheers,

Smallbuyer

 

[Jamie M]

Hiya

It shouldn't effect existing discounts already in place.

Cheers

Jamie

 

[Peter_Tersteeg]

I haven't seen any of that either, I don't expect it will occur.

From a certain point of view, this isn't higher rates for investors, it's just that the banks are now more willing to discount owner occupied lending. The standard published rates are still available to investors, lenders are simply trying to attract more owner occupied business.

I agree this sounds kind of dumb.

 

[Jess Peletier]

Anything about higher fixed rates for IP vs PPOR if people want to fix existing IP loans?

I know Macquarie's fixed rates for PPOR sub 80% on P&I are 0.1% lower than for investors/IO.

Not sure off the top of my head about others.

 

[Paul@PFI]

One of the financial journos (??) asked a few major banks that and he said they all were adamant that these new policies apply only to new loans and not existing loans or pre-approved loans awaiting settlement. He did say that some banks were taking varying approaches to pre-approvals and were applying revised servicing calcs and other weren't.

I see ANZ just announced it wont offer investor discounts anymore UNLESS they have a homeloan for their own residence with ANZ. Here is a basic up to date summary

Making it up as they go ? The APRA threat to single out unco-operative banks seems to be the driver. Wait for the dust to settle and some competition smooth things out.

 

[Potus]

Hiya

It shouldn't effect existing discounts already in place.

Cheers

Jamie

I currently have an owner occupier loan that will become an investment loan as I will lease out the property in the near future. Will my current interest rate discount be affected? I'm with CBA.

Thanks.

 

[Jess Peletier]

I currently have an owner occupier loan that will become an investment loan as I will lease out the property in the near future. Will my current interest rate discount be affected? I'm with CBA.

Thanks.

Not if you don't tell them, and I can't see any reason why that should be necessary.

 

[Roosterman]

Well you would need to tell them of your change of address, wouldn't you? Might be a clue that the property is no longer your PPOR

 

[Jamie M]

From a certain point of view, this isn't higher rates for investors, it's just that the banks are now more willing to discount owner occupied lending. The standard published rates are still available to investors, lenders are simply trying to attract more owner occupied business.

Yep - spot on.

The fact that it just means "no discretionary" discounting needs to be recognised more.

With most IP loans (usually above $250k) your banker/broker will put up a "pricing request" and ask for a further discount on the rate. Realistically, this can result in a further discount of anywhere between 0.05 to 0.30 off the standard variable rate and it's usually determined by level of borrowings and LVR.

It's not like lenders have just dramatically increased the cost of IP loans over night - they're just not "currently" providing those discretionary discounts on IP loans.

Realistically - I can't see the lack of discounting on investment loans causing a big hit to most investors.

All the talk of it in the media about IP loans becoming "more expensive" is going to have a much greater impact on the market then the actual stopping of discretionary discounting IMO.

Cheers

Jamie

 

[unloadmymind]

ANZ no longer offers discounts from SVR for IP-only loans.
Discounts still available for those with OO+IP loans (although perhaps with X-Coll involved).

 

[smallbuyer]

What about package discounts with ANZ? @ the SVR surely there business from people without OO will drop by about 99% because they will be almost 1% above the competition.

Perhaps banks are trying to push people in Fixed rates to lock them in.

 

[Peter_Tersteeg]

You still get the standard published Breakfree discounts as an investor with ANZ. Same as all the other lenders pro-packs. You're just not going to be able to negotiate outside of the published discounts.

 

[Jamie M]

What about package discounts with ANZ? @ the SVR surely there business from people without OO will drop by about 99% because they will be almost 1% above the competition.

Perhaps banks are trying to push people in Fixed rates to lock them in.

There is still normal discounts off the SVR. There just isn't FURTHER discretionary discounting.

So today you'll get a 0.9% discount on a $500k loan. Last week, if you asked nicely, they probably would have given you 1.1%

It's really not as bad is it's being made to sound.

It's not like all IP loans are now 5.5%

Cheers

Jamie

 

[northhome]

I have a pre-approved investment loan from one of the big 4 banks. Going to the auction in less than 10 days, just wondering whether the recent tightening seen in the market is going risk my chance of getting the loan? are they going to knock me back just because IP loan is no longer that wanted?

I am trying to buy in Sydney's upper north shore, LVR will be 50-60%, simple property & finance, no land/title/property type/credit report/building report drama, all documents are bullet proof, just average joe buying average north shore home. approved for amount X and I actually only need 90% of X, so there is also a 10% buffer if they choose to screw me by arguing .

A little bit worried as I am a newbie and didn't have experience on such lending policies cycles.

Thanks.

 

[smallbuyer]

I imagine next time i try to squeeze all my banks for lower rates they wont be coming to the party Luckily ive squeezed them all many times previously and gotten some reasonable extra discounts already

 

[Jamie M]

I have a pre-approved investment loan from one of the big 4 banks. Going to the auction in less than 10 days, just wondering whether the recent tightening seen in the market is going risk my chance of getting the loan? are they going to knock me back just because IP loan is no longer that wanted?

I think you should be fine.

What's your borrowing capacity like? If it's quite good - then there shouldn't be any impact. If it's tight - then it wouldn't hurt to check in with your broker/lender just to double check that all is still good.

It sounds fine though.

Cheers

Jamie

 

[Peter_Tersteeg]

@northhome, with a 50%-60% LVR, I don't think you're going to have a problem. Best of luck at the auction.

 

[northhome]

thanks guys. will double check with the bank to make sure I don't do anything stupid.

It is just a bit unlucky to start at the beginning of this policy tightening cycle. Will report back what happens to my loan application when it is done.

 

[RetireRich101]

What's the guesstimate on what the banks will do on your 'discretionary discount' for topup finance (with same bank) or refinance?

If banks attempts to take away your discretionary discount when you try to access equity, I would think alot of SS member here will be sitting on their balcony playing with their thumbs

 

[NPB]

What's the guesstimate on what the banks will do on your 'discretionary discount' for topup finance (with same bank) or refinance?

If banks attempts to take away your discretionary discount when you try to access equity, I would think alot of SS member here will be sitting on their balcony playing with their thumbs

You just do the equity release as a side loan which in most cases u should do anyway. That way you maintain discount on current lending.