A high-level official of one of Australia’s biggest banks believes banks are doing the right thing by hitting investors with higher interest rates compared to owner occupiers.
NAB’s head of personal banking Gavin Slater said it made sense for investors to face higher interest cost than home owners due to their differing priorities.
Following the recent efforts by APRA to slow down investor lending, a number of banks have responded by hiking rates on investor loans. The increases have been mostly around 0.3% and were described as “unfair” by the Property Investment Professionals of Australia (PIPA).
“Increasing borrowing costs for investors, and in some cases owner occupiers, who bought into the market some time ago seems unfair and detracts from what should be the common goal of creating a balanced property market,” PIPA chair Ben Kingsley said.
But Slater said the moves were a necessary step the banks needed to take given the current economic climate.
“From a property investor point of view, conditions are, particularly in recent times, very favourable,” Slater said in an interview with Fairfax media outlets
“Our perspective is that you look to the future, at some point interest rates will go up, and [we are] recognising that now is a really appropriate time to adjust our pricing to reflect what we believe is the underlying risk in that book,” he said.
With the slowdown of investor lending seemingly well underway, Slater also said the NAB and other lenders would be ramping up offers to entice owner occupiers looking for finance.
“It probably feels more competitive than it ever has been, because all the lenders now are really going hard at the owner-occupiers, to offset the flows around the investor book,” he said.
Australian Broker Online, 11 September 2015