Why are some banks increasing their interest rates and others are not?
- Interest rates can vary by as much as 1.5% between owner occupied with Principal & Interest repayments and investments with Interest only repayments
- The Government regulator is focusing on families paying off their household debt and improving their balance sheets
- Loans structured as Owner Occupied Principal & Interest are the cheapest to access
- With interest only investment loans at a higher rate the property market has slowed
- The banks have made their decision around the differentiation of interest rates on loans; so going forward any further movement will be due to the cost of funds
What can you do to mitigate the risk? It's a good time for you to review your loans and compare repayment options, either variable, fixed or a combination of both.