Property investors looking to switch lenders as costs bite

Property investors looking to switch lenders as costs bite

Property investors have faced pressure on their cashflow and strain on their resources during COVID-19, as tenants are forced to ask for paused or reduced rent.

A recent survey shows that more than a third of investors would consider refinancing their portfolio to a new lender if offered interest rates just .5% lower than their current loan.

According to the 2020 PIPA Annual Investor Sentiment Survey around 36% of investors would consider moving home loans for a reduction of even half a percent in interest rates and 65% would do the same for a 1%.

“Investor and interest-only interest rates have reduced over recent times but are still significantly higher than owner occupier home loans,” said PIPA chairman Peter Koulizos.

“Many investors are also coming off fixed rates and are refinancing to obtain rates that are one or, sometimes, two percentage points lower than what they had been paying,” he added.

With 16% of tenants asking for a pause or reduction of rent during the pandemic, the survey suggests that lower interest rates would significantly reduce the strain that cashflow has been put under over the last six months.

More than 13% of investors claimed that they had a deficit in cashflow and around 8% of investors applied for a mortgage repayment pause. Around 8% also had to withdraw funds from their superannuation, with the survey putting the onus on reduction in personal or rental income.

The survey also suggests investors have a shaky faith in banks as less than 10% would secure finance directly a bank for their next investment property loan. Instead 80% stated that they would use a broker when financing their next purchase, with 71% answering that they had used a mortgage broker to do so over the past year.

Koulizos claims that investors have had to pay “unfairly high” interest rates and that the results from this survey show that in this time of historically low interest rates investors are keenly searching for better home loan deals.

 

Hannah Page, Australian Property Journal, 19 October 2020
https://www.australianpropertyjournal.com.au/2020/10/19/property-investors-looking-to-switch-lenders-as-costs-bite/

 

Investors on the hunt for better deals

Investors on the hunt for better deals

The 2020 PIPA Annual Investor Sentiment Survey found that approximately 36 per cent of respondents would consider an offer from a new lender if they were to secure a lower rate, even if this rate was only marginally lower.

“Investors have had to pay unfairly high interest rates ever since they were unnecessarily targeted by APRA a number of years ago,” PIPA chairman Peter Koulizos said, commenting off the back of the findings.

“Investor and interest-only interest rates have reduced over recent times but are still significantly higher than owner-occupier home loans.

“Many investors are also coming off fixed rates and are refinancing to obtain rates that are 1 or, sometimes, 2 percentage points lower than what they had been paying.”

The PIPA survey also found that 65 per cent of investors would consider refinancing for an interest rate differential of up to 1 percentage point.

A further 16 per cent of tenants had asked for a rent reduction or holiday during the pandemic, the survey found.

“About 8 per cent of investors also applied for a mortgage repayment pause during the lockdown, but the majority (75 per cent) did not have to continue the arrangement beyond its original term.”

Elsewhere, the survey pinpointed trends on super and how investors go about securing finance.

The survey found that around 8 per cent of investors withdrew funds from their superannuation during the pandemic, with the main reasons for doing so being reductions in personal or rental income.

“Even more investors, at 80 per cent, also indicated they would use a broker to obtain finance for their next property purchase,” Mr Koulizos said.

“Fewer than 10 per cent of investors indicated they would secure finance directly from a bank for their next investment property loan.”

 

Emma Ryan, Smart Property Investment, 19 October 2020
https://www.smartpropertyinvestment.com.au/finance/21789-investors-on-the-hunt-for-better-deals

Half a percentage point enough to tempt investors to new lenders

Half a percentage point enough to tempt investors to new lenders

More than a third of investors would consider refinancing to a new lender to secure only marginally better interest rates, according to new research.

The 2020 PIPA Annual Investor Sentiment Survey found about 36 per cent of investors would consider moving their portfolio to take advantage of interest rates just half a percentage point lower than their existing home loans.

PIPA Chairman Peter Koulizos said the survey result made it clear that investors were on the hunt for better home loan deals, especially in the current historically low interest rate environment.

“Investors have had to pay unfairly high interest rates ever since they were unnecessarily targeted by APRA a number of years ago,” Mr Koulizos said.

“Investor and interest-only interest rates have reduced over recent times but are still significantly higher than owner occupier home loans.

“Many investors are also coming off fixed rates and are refinancing to obtain rates that are one or, sometimes, two percentage points lower than what they had been paying.”

The survey also found that 65 per cent of investors would consider refinancing for an interest rate differential of up to one percentage point.

Mr Koulizos said lower interest rates significantly improves investor cash flow, which have been under pressure over the past six months.

The survey found that more than 16 per cent of tenants had asked for a rent reduction or holiday during the pandemic.

“Reduced, or even no, rent coming in meant that more than 13 per cent of investors indicated in the survey that they had a cash flow deficit each month,” Mr Koulizos said.

“About eight per cent of investors also applied for a mortgage repayment pause during the lockdown, but the majority (75 per cent) did not have to continue the arrangement beyond its original term.”

About eight per cent of investors also withdrew funds from their superannuation during the pandemic, according to the survey, with the main reasons for doing so being reductions in personal or rental income.

Mr Koulizos said the vast majority of investors, at 71 per cent, used mortgage brokers to secure finance over the past year.

“Even more investors, at 80 per cent, also indicated they would use a broker to obtain finance for their next property purchase,” he said.

“Fewer than 10 per cent of investors indicated they would secure finance directly from a bank for their next investment property loan.”

ENDS

For more information, or to organise an interview with Peter Koulizos, please contact:

Bricks & Mortar Media | media@bricksandmortarmedia.com.au | 0405 801 979


About PIPA

Property Investment Professionals of Australia (PIPA) is a not-for-profit association established by industry practitioners with the objective of representing and raising the professional standards of all operators involved within property investment.

For more information visit www.pipa.asn.au