New data from RareCity shows banks are giving more preference to owner-occupier mortgage borrowers, offering them lower interest rates than other types of borrowers.
According to RareCity's analysis, owner-occupier borrowers who have at least 20 percent deposit are enjoying an interest rate of 4.35 percent, a 0.07 percentage point drop from six months ago.
As reported by The Sydney Morning Herald, while those who can afford bigger deposits get the best deals, other borrowers are paying higher rates than six months ago. For instance, property investors with less than 20 percent deposit are now charged 4.9 percent from 4.68 percent in June last year.
These changes in mortgage rate offerings come as competition for owner-occupiers is growing among banks whose loan books cannot be immediately increased by more than 10 percent as per regulatory rules, SMH said. In addition, owner-occupiers cashing up big deposit are also lower-risk clients.
In a related mortgage loans news, banks are reportedly going to introduce another wave of rate increases this year. According to The Motley Fool Australia, the country's big four banks - Australia and New Zealand Banking Group, Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corp -- are likely to raise mortgage rates in a bid to recover costs from additional capital investments.
These four banks, which have controversially increased mortgage rates last year, have an average home loans rate of 5.7 percent. The Motley Fool Australia said that further increasing their rates would force customers to shift to smaller lenders that offer as low as 3.69 percent. On the other hand, if they do not increase their offerings, their margins and profit growth will suffer.
The Motley Fool Australia further said that when the big four's rate increase materialized, it should not be a surprise as headwinds are rising for these banks.
