APRA’s removal of the Interest Only Lending cap will lower rates

The announcement of the removal of the 30 percent cap for new interest-only residential mortgages will allow lenders to offer more choice for customers, leading to an increase in competition across the industry, particularly for smaller and regional banks, the Australian Banking Association chief, Anna Bligh said

While banks are definitely watching their lending practices while the Royal Commission finshes up, they now have got the go ahead to start claiming greater market share of the investor loans markets.

Some have predicted that the increased competition in this corner of the market may lead to a drop in rates. Others however, have noted that the banks have netted over $1 billion from investors by hiking their rates up under the vail of APRA regulations. Banks being as greedy as they are may not like to see that easy profit margin go.