Tic: Toc Leads Online Lenders Charge on Investor Mortgage Rates

Mortgage rates for residential property investors are at their lowest in years, and Australian online mortgage lenders are the providers at the forefront of the push towards higher rates.

Since March 2020, when the Reserve Bank made consecutive reductions in the official exchange rate, the average floating rate in the Mozo database for investors making principal and interest repayments has fallen by 47 basis points. .

In fact, the current average investment loan rate of 3.63% is the lowest recorded in the Mozo database since monitoring began over six years ago.

“Since the RBA ‘corona cuts’ in March of last year and various stimulus packages, there has been significant downward pressure on interest rates from residential investors,” said Peter Marshall, expert in Mozo interest rate.

“It is clear that investors have reaped the benefits of the Reserve Bank’s Term Finance Facility (TFF), the removal of the APRA cap on interest-only loans, changes in service ratios and growing competition from online lenders. “

As the chart below shows, investor rates are a far cry from what they were just a few years ago.

Variable rate mortgage loans

“Four years ago, investors were looking for average interest rates of only 5.12% and lenders were limited by the volume of loans they could issue under the APRA cap,” says Marshall.

“Although rental yields may be under pressure during the pandemic, capital gains have remained strong. Today, investor rates are at record highs and real estate prices are on the rise.

Online lenders are leading the pack

So we know what average variable rates look like for investors right now, but the lowest rates offered are another story.

Earlier this week, we reported the dominance of online lenders at the sharp end of the variable rate market. But the same goes for investor rates, with online lenders currently holding the five lowest rates in our database.

In particular, the Adelaide-based fintech Tic: Toc currently has the particularity of having the lowest variable rates (at 80% LVR) offered to owner-occupiers and investors in the Mozo database with its variable mortgage offer.

Lowest variable investment rates ^^

In comparison, the average Big Four floating rate for an investor is currently 4.01% – a whopping 182 basis points above the Tic: Toc rate.

According to our mortgage loan repayment calculator, on a loan balance of $ 500,000 repaid over 20 years, the difference between these two rates is equivalent to a difference of $ 458 in monthly repayments and $ 109,892 in additional interest paid on the term of the loan.

“With online lenders competing for investor loans, it pays to look beyond the big four and compare what’s on offer,” says Marshall.

RELATED: Real estate investors take out real estate loans at the highest level since 2015

Is It Time To Get A Lower Rate On Your Own Loan? If you’re an investor you’ll want to check out some of the great deals shown in the table below, or compare even more deals for all types of borrowers, make sure the Mozo home loan comparison chart is your first destination.

^^ Interest rates are based on an investor making principal and interest payments on a loan of $ 400,000 with an LVR of less than 80%. Loans tracked in the Mozo database with precision as of July 15, 2021.

* CAUTION: This comparison rate only applies to the example (s) given. Different amounts and terms will result in different comparison rates. Costs such as redemption or prepayment charges, and cost savings such as fee waivers, are not included in the comparison rate but can influence the cost of the loan. The comparison rate displayed is that of a guaranteed loan with monthly repayment of principal and interest of $ 150,000 over 25 years.

** The initial monthly repayment figures are only estimates, based on the advertised rate, loan amount and term entered. The rates, fees and charges and therefore the total cost of the loan can vary depending on the amount of your loan, the length of your loan and your credit history. Actual repayments will depend on your personal circumstances and changes in interest rates.

^ See information on the Mozo Experts Choice Home Loan Awards

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