What does it take to make investors switch loans?

Oct 2020Karen Millers

According to the Property Investment Professionals of Australia (PIPA), 36 per cent of investors would switch rates to save half a percentage point on their mortgage.

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 record-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.”

As the rate of savings increases, so does the likelihood of investors switching, with the research showing two in three investors would change to save 1 per cent on their mortgage repayments.

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

Further, 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 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.”

About 8 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.


Cameron Micallef, Nestegg.com.au, 20 October 2020

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.

2023 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.