The APRA Ripple Effect

APRA ripple effect making waves

Written by David Lennox

APRA changes are still making waves in our industry.  The big 4 lenders and some others have raised their interest rates in October to help meet APRA’s capital adequacy requirements (read more HERE).  This is after industry-wide rises a few months ago for investment loans.  So now many of you have now had 2 non-RBA-inspired rate rises in the last few months.

These capital requirements apply to the Big 4 banks and Macquarie Bank, so we are waiting to see how other lenders respond with their rates.  We may be entering an environment where there is not just a rate spread between owner occupied v investment, but also between big lenders and smaller lenders!

Four months ago the rates for owner occupied and investment loans were the same – lenders did not discriminate.  Now we have rate spreads STARTING at 0.25% at the same lender for different loan criteria.  If you want a 3yr fixed rate at ANZ, there is a 0.6% difference between investment and owner occupied – who would have thought that 6 months ago?  It is a dynamic and fast moving environment with little sign of abatement.

Lenders are currently offering discounts based on:

  • Traditional factors such as loan size, LVR and the servicing strength of the deal
  • New factors such as Owner Occ v Investment or P&I v Interest Only

The diversity in interest rates, lending policy and servicing assessment (ie, the amount that different lenders will lend you) keeps widening.  Another reason to speak with an experienced team such as Vision Property & Finance

Recent Rate change announcements:

Average variable (after recent rate announcements wash through)

  • Own occ – 4.75%
  • Invest – 5.02%

Average 3yr fix

  • Own occ – 4.45%
  • Invest – 4.75%

Average 5yr fix

  • Own occ – 4.75%
  • Invest – 4.98%

These are average carded rates of Big 4 banks for a $500K loan with an LVR of 80% at 27 October 2015 – we would naturally be negotiating hard for your clients to achieve better…

Calculate the impact of the APRA ripple effect on your current loan

Should you wish to know how APRA influence your rate, the impact of the APRA ripple effect on your current loan, and how your bank has responded to these changes, it may be a good time to review your lending arrangements. We at Vision Property & Finance walk with you every step of the way and want to see you make sound financial decisions for now and your future and would like to invite you to meet with us to discuss these changes should and review your loan.

You can contact us here and we will call you.


Dave Lennox

About the writer: Dave founded Vision with Matt Ivers in 2000. He oversees the strategic direction of Vision Property & Finance and ensures that systems are in place to support mortgage brokers and the admin team.  He has nearly 25 years experience in the mortgage broker and finance business, and is a trusted credit advisor to hundreds of happy customers. Make contact with Dave at