Non-major bank lowers investor interest rates

The reduction applies to Mortgage Simplifier and Orange Advantage investor variable interest rates and will be effective for new loan applications formally approved from 4 February 2021.

ING has decreased the variable interest rate by 0.05 per cent, taking the new rate from 2.64 per cent (2.67 per cent comparison rate) for a principal and interest Mortgage Simplifier loan. This is applicable for aggregate borrowings between $150,000 to $1 million and a loan-to-value ratio (LVR) less than or equal to 80 per cent).

Similarly, ING’s interest-only Mortgage Simplifier loan has decreased by 0.05 per cent to a new variable interest rate of 3.04 per cent (3.06 per cent comparison rate), with identical terms.  

The non-major bank has also decreased its principal and interest Orange Advantage loans by the same amount, taking it to a new variable interest rate of 2.69 per cent (3.03 per cent comparison rate) and decreased (0.05 per cent) its interest-only variable interest rate to 3.09 per cent (3.42 per cent comparison rate).

Principal and interest investment loans’ fixed rates have also decreased, with one-year, two-year and three-year terms all now at 2.34 per cent. This means that the one-year rate has decreased by 0.75 per cent, while the two-year and three-year terms have dropped by 0.15 per cent.

Glenn Gibson, acting head of retail banking, said the new investor rates were among the “most competitive in the market", telling Mortgage Business: “We’re finding that, increasingly, customers are wanting investor loans. 

“This rate change is just one example of how we continue to serve our customers with simple effective banking products,” he concluded.

Investment loans on the rise

Investor lending had dropped off dramatically last year in the early stages of COVID-19, with new investor loan commitments having reached their lowest level since November 2002 in May 2020.

However, investors have been gradually increasing their activity in the market.

According to the latest Australian Bureau of Statistics (ABS) lending indicators figures, the value of lending to investors rose by 14.1 per cent in the December 2020 quarter compared with the September 2020 quarter. 

The total value of loan commitments for investor housing, as of December 2020, rose to $6.1 billion, according to the latest ABS data.

These figures have indicated that “investors have returned to the market”, according to Housing Industry Association (HIA) economist Angela Lillicrap.

However, Archistar chief economist Dr Andrew Wilson noted that despite steady monthly increases in investor lending since June 2020, the market share of overall residential loans for the investor sector fell to a new record low of just 19.46 per cent over December – compared with 20.99 per cent for first home buyers and 59.55 per cent for owner-occupiers.

“This is well below the average market share for investors of 33.13 per cent and significantly lower than the peak result of 43.15 per cent recorded in April 2015,” according to Archistar. 

The chairman of the Property Investment Professionals of Australia (PIPA), Peter Koulizos, has said that he expects investment activity will continue to rise this year.

“The low point for investment activity was May last year; however, new loan commitments have grown since that time to be about 10 per cent higher in December than the same period the year before,” he said.

“In fact, the latest official data shows that more than $6 billion-worth of new investor loans were recorded in December – the highest level since July 2018.”

[Related: Loan commitment levels continue to soar]