If there is one message to explain to our
clients this month it is for everyone to spend 15 minutes and call or email
us to do a simple rate and product review on their current setup.
Every lender, without exception has changed
its policy or products dramatically in the past six (6) months. These changes
have been in response to government pressure to reduce the flow of finance to
investors. However, there are many home owner borrowers being negatively
affected by the sweeping changes all the same.
I have discussed some of these changes in
our newsletters over the past few months. Top of the list of changes is that
interest-only (IO) loans are being charged a hefty premium. In our calculations
all but very extreme circumstances will be better served changing to principal
and interest (P&I) on all their loans. The cash-flow change will actually
be neutral given the extra premium being paid for IO loans.
Of course investor’s borrowings are being
slugged at higher rates. However a small number of lenders are using the
majority purpose which allows you to borrow for investment using your home loan
and importantly at home loan rates.
The other important factor to recognise for
investors is that not all lenders have been quite so harsh. For example ANZ and
Bankwest have all but said they are no longer lending to investors by hiking
their rates up to close to 6%. Unless of course you want to fix your investment
mortgage in which case both these lenders are amongst the cheapest. Confusing I
know, but that’s where Blue Zinc can help navigate this minefield.
Finally, if you have a home loan and are
sitting back reading this thinking …yay, I’m not affected by all this hoo-haa,
those rich investors deserve to be paying a premium anyway… think again. All
home loan rates have changed. I repeat all home loan rates have changed. Some
lenders have reduced their home loan rates based on loan to valuation ratio
(LVR), but have cunningly not automatically passed this on to existing
customers. You need to tell them your house is worth $X to get the better rate.
Interestingly a few of the second tier
lenders such as AMP, ING, Suncorp and others are working hard to attract new
business. They have been able to avoid some of the extra scrutiny the Big Four
(includes Bankwest and St George) banks have had to deal with. So they are
seizing the opportunity to fight for a little extra market share.
The days of finding a good solid lender and
sticking with them for the life of your loan have long gone. Now the government
has removed exit fees and Blue Zinc can streamline the application process
there really is no reason not to take 15 minutes, get on the blower and call
We look forward to chatting with you soon.
Have a great Monday.
Blue Zinc team