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Brokers should educate clients on the benefits of switching loans to take advantage of the record-low interest rate environment, according to Smartline Personal Mortgage Advisers.
Smartline’s executive director, Joe Sirianni said with interest rates now around the mid-four per cent range and lower, there’s no need for Australians to have an interest-only loan, whether they’re an investor or owner-occupier.
“The significant drop in interest rates in the past couple of years means principal-and-interest repayments are similar to what interest-only were,” he said.
Mr Sirianni noted with the current principal-and-interest rates, borrowers who make the switch from interest-only could be paying a couple of hundred dollars less in repayments every month and get “even further ahead”.
“Property investors would be well advised to work with a quality mortgage adviser to look at their current loan arrangements,” he added.
“This is to ensure they are maximising the opportunities associated with the record-low interest rates on offer and managing lenders’ changing requirements.”
Looking ahead, Smartline believes there is a strong possibility that lenders will soon look to restrict or reduce the number of interest-only loans they offer, in response to warnings by APRA about the need to slow investor credit growth.
“We are now seeing lenders starting to actively raise the bar in terms of the requirements investors have to meet and the restriction of interest-only loans will probably be one of those moves,” Mr Sirianni said.
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