So you’re a property investor and you’re being slammed with rate rises. Unfortunately, I’ll have to start by saying, there is no relief for you in the immediate future. Especially if you are paying interest only.
In my opinion there is a cause and effect in play with two major influencers none of us can avoid.
We have the Australian government on one hand putting pressure on banks to slow investors from buying up all of the local property. They’re doing this for good reason but I don’t think it’s going to help. They need to make efforts to leave some property for people trying to buy a home to live in. Over the past few years because of you, property prices skyrocketed. It was too easy to accumulate property whilst rates remained at record lows, rents were strong, properties were plentiful and paying Interest Only meant you were hardly out of pocket. So the government is doing their bit by stepping in and forcing banks to reduce their appetite for investors, pushing rates up, especially on interest only loans to try and make the metrics on your next investment not look so attractive.
Then on the other hand we have the banks. They have been given an opportunity on a silver platter to charge extortionist rates to investors trying to continue their quest to retire through wise property investment. This was given to them by our own government. I understand we need to curb investor lending, but how does that mean they should hike the rates of their existing customers. We’re not talking small hikes either, some of which are over one percent, instantly.
In a good way it gives us brokers far more exposure to clients being ripped off by the bank they’ve been so loyal to for the past 20 years. Then they suddenly couldn’t give a shit about them. We have seen banks pushing clients out altogether, asking them to refinance or sell by a particular date. The reality is, it’s only going to get tighter and more expensive before it gets better. So keep an eye on your affairs and be sure to review your current portfolio, always remember investing in property is a business transaction, if you’re not winning then do something about it.