Property investors looking to switch lenders as costs bite

Oct 2020Karen Millers

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/

 

We strive to bring accountability, ethics, and education to the property investment industry.

PIPA exists to improve the professional standards of anyone providing property investment advice to consumers. Our voluntary Code of Conduct means that members adhere to a high set of professional standards to help protect consumers. Qualified Property Investment Advisers (QPIAs®) have the highest form of industry-recognised, specialist training and can be trusted to provide tailored and unbiased advice to consumers.

PIPA also regularly produces research, analysis, and publications to help educate our members, media, and consumers about the property investment sector.

By signing up for our newsletter, you will gain access to two of our most valued resources – the Annual Investor Sentiment Survey report and the quarterly PIPA Adviser e-magazine.

2024 Investor Sentiment Survey

The Annual PIPA Investor Sentiment Survey is a rare snapshot of the buying intentions of property investors.

PIPA Adviser Magazine

The PIPA Adviser provides the latest research on market conditions, including forecasts for next year.