Last November the Reserve Bank increased the amount of capital Banks needed to hold when lending on investment properties which we comments
on in a previous blog HERE. As
per our comments then the Banks have been absorbing so far the pricing difference with it being such a competitive market that they are not
wanting to lose market share. In the last couple of weeks we have received the first confirmation from one Bank who has stated that they are
now pricing investment loans different to mortgages on owner occupied properties. Currently the price difference is seeming to be in the
region of 0.25% but it will differ across the rate curve. This is likely in the short term to go in one of two directions. The first is that
the other Banks look to grab market share off the lender whom has moved, the second is that they use it as a chance to also implement the
same policy.
Having said that I will be surprised if most lenders aren’t all implementing this firmly in the medium term so this is something to take
into consideration if you have debt coming off fixed rates that you may want to consider taking a slightly longer term if your existing
lender is not pricing your investment loans differently to give you a bit more protection. We have had recently some lenders whom have been
pricing 3 years rates quite closely to the 2 years and thus have recommended in many cases where it has fixed the clients requirements that
they take the additional years price certainty by fixing for the 3 year term.
If you would like to discuss or have us assist with your interest rates please email jenna@krispedersen.co.nz who
will work with me to see where we can help.