AMP, Heritage slash investment home loan rates as investment lending grows

author-avatar By on April 09, 2021
AMP, Heritage slash investment home loan rates as investment lending grows

AMP and Heritage Bank slashed investment loan rates this morning, with one loan cut by nearly a full percentage point.

The biggest cut was to AMP's Investment Basic Variable Loan, paying interest-only (IO), available for borrowers with up to 80% LVR.

AMP's loan was cut by 95 basis points, and now offers an advertised rate of 2.99% p.a. (3.19% p.a. comparison rate*).

For those wanting to pay principal and interest (P&I), the Investor Basic Variable Loan with 60% LVR was cut by 94 basis points to 2.74% p.a. (2.77% p.a. comparison rate*).


Buying an investment property or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for investors.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) investment home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

Heritage Bank also made quite a few cuts to its investment home loans, with two of the key ones being:

  • Investment Fixed P&I 3 Years: 10 basis point cut to 2.59% p.a. (4.54% p.a. comparison rate*)
  • Home Advantage Investment Fixed IO 3 Years: 20 basis point cut to 2.69% p.a. (3.42% p.a. comparison rate*)

The maximum LVR applicable to both of these loans is 90%.

The sizeable cuts have somewhat bucked the trend seen in the owner-occupier space, with some lenders raising rates in recent weeks, shirking a long run of record-low home loan rates.

On Monday, Suncorp announced it will waive the annual package fee of $375 for customers refinancing their home loan to the Queensland-based lender.

This offer is applicable to mortgage sizes over $250,000, and is available to owner occupiers and investors with LVRs less than 90%. 

Is investment lending rebounding?

Throughout 2020 and very early 2021, first home buyers and owner occupiers were flooding the market, but that changed slightly in February.

Owner-occupied lending fell 1.8% on the month, while investment lending rose 4.5% to be nearly a third higher than a year prior.

So is investment lending on the way back to its glory days?

According to Archistar chief economist Dr Andrew Wilson, maybe not so much.

"Although investor activity bucked the national home lending trend over February, the rate of growth was the lowest for four months," Dr Wilson said.

"And despite recent growth, investor lending remains subdued, accounting for just 20.25% of total home lending and remarkably still below the 20.4% market share for first home buyers.

"The average long-term residential loan market share for investors is 33.3% with the February total still 31.0% lower than the record $10.1 billion approved over April 2015 during similar strong market conditions."

Dr Wilson also pointed to a couple of prevailing headwinds for investors.

"Finance constraints remain a significant barrier to investor activity with that group continuing to pay higher interest rates compared to owner-occupiers with a current differential of 0.58% according to the RBA," he said.

"Ongoing lending restrictions to investors have significant longer-term implications for housing supply and general economic growth.

"Although investor activity is revived dragged along by booming housing markets, underlying levels remain clearly at record lows."


Photo by Abby Savage on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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author-avatar
Harrison joined Savings in 2020. He is an experienced journalist, with previous stints at News Corp and financial comparison site Canstar. With a keen interest in personal finance, Harrison is passionate about helping consumers make more informed financial decisions.

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