Interest Rate Rises Not the Banks Fault!

Sounds rather surprising, doesn’t it?

The news regularly reports that the “Big Four” are declaring billions of dollars in profit and a chunk of that is coming from “Mum and Dad” investors and homebuyers who are paying over the odds in interest on their loans. Well in many cases yes, property buyers are paying more interest than they would if they could switch lenders.

However, the Australian Prudential Regulation Authority (APRA) thought things were looking grim with the amount of household debt (particularly in Sydney and Melbourne) so decided to put the brakes on lending for investment and interest-only lending.  (Simply put, APRA is a regulatory body that oversees the financial services industry to ensure lenders behave responsibly and the financial wellbeing of Australians is protected. APRA want the banks to lend wisely to remain viable and that their customers don’t get into financial strife).

Most increases are being applied to manage APRA requirements introduced to limit interest-only lending growth to 30% of new home loan settlements and limiting investor lending portfolio growth to 10%.

To partially balance this out some lenders have dropped their owner occupier principal and interest rates. But mostly a lot less than the increases (imagine a see-saw with a mouse and an elephant…).

With rates changing in both directions and diverse changes to lending policies it is difficult to keep informed of what is happening.

And could APRA make it even more confusing? Quite possibly.

Tick Finance has kept up with the changes and has the knowledge and experience to check your loan options.

If you’d like to know what you could achieve please contact us anytime.

You never know what options may be there for you!