Big bank trims investor fixed rates

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In the lead-up to the Reserve Bank of Australia's first monetary policy announcement this year, Westpac has announced cuts of up to 50 basis points to its fixed-rate investment loans.

The changes apply across all terms: Package and non-package rates for both principal-and-interest (P&I) and interest-only (IO) options were reduced. A maximum loan-to-value ratio of 80% is required for these offers.

Westpac's five-year fixed investment P&I loan now has a fixed rate of 3.19%, down from 3.69%. Meanwhile, the five-year fixed rate for IO loans has been reduced to 3.39%.

The table below shows the changes to Westpac’s P&I and IO investor fixed rates. The comparison rates are calculated based on a $150,000 loan amount for an overall loan term of 25 years.

Westpac Fixed Rate Investment Loans – P&I (Premier Advantage Package)

Fixed Term

New Rate

Old Rate

Comparison Rate

One year

3.19%

3.69%

4.40%

Two years

3.09%

3.28%

4.31%

Three years

3.09%

3.28%

4.23%

Four years

3.19%

3.69%

4.19%

Five Years

3.19%

3.69%

4.12%

 

Westpac Fixed Rate Investment Loans – IO (Premier Advantage Package)

Fixed Term

New Rate

Old Rate

Comparison Rate

One year

3.39%

3.79%

4.65%

Two years

3.29%

3.49%

4.54%

Three years

3.29%

3.49%

4.46%

Four years

3.39%

3.79%

4.41%

Five Years

3.39%

3.79%

4.35%

 

Westpac appears to be boosting its presence to attract more investors. Figures from the Australian Bureau of Statistics show that the investor segment witnessed the highest growth in loans over the last 12 months in November.

This growth is consistent with other indicators pointing to the housing market's early stages of recovery from the downturn, said Master Builders chief economist Shane Garrett.

"The renewed enthusiasm amongst investors for Australian housing is the result of a return to solid house price growth in key markets as well as the more attractive financing conditions flowing from three RBA interest rate cuts last year," he said.

Activity from investors and their share of the market are likely to rise this year for several reasons. CoreLogic research director Tim Lawless said the improved prospects for capital gains could attract more investors to the housing market.

"Investors are likely to be motivated by prospects for capital gain, as well as the fact that gross rental yields, although generally low, are likely to be higher than the cost of debt," he said.

Economists are predicting further rates adjustments, with the RBA making its first cut for the year in its meeting next month. With this outlook for Australia’s interest rates, investors would likely see more opportunities for positively-geared properties, Lawless said.

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