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A recent move from the Commonwealth Bank has positioned its variable investor rate as the lowest available among the big four banks.
CBA has cut its investor variable rate by 0.07–0.12 percentage points, offering the lowest variable rates for investor loans among the big four banks.
In the past five weeks, the bank has lowered the Digi Home Loan’s advertised variable rate three times, by 0.06 per cent on 7 May and 0.25 per cent on 30 May, following the Reserve Bank’s cash rate cut, and again by 0.09 per cent on 13 June.
CBA online only investor loan principal and interest now stands at 5.69 per cent, while its investor loan interest only stands at 5.95 per cent.
While CBA already offered the lowest variable home loan rate for investors, Canstar said the latest cut has cemented the bank’s position among the big four.
In comparison, Westpac and ANZ’s lowest investor variable rates sit at 5.84 per cent and 5.89 per cent, respectively.
While NAB sits at 6.46 per cent, being the only big four bank without an investor variable rate in the 5 per cent, its subsidiary Ubank currently offers a lower rate of 5.74 per cent.
In Australia, the average investor variable rate following the May RBA cut stands at 6.06 per cent, while new customers are estimated to be paying an average of 5.96 per cent.
Canstar data insights director, Sally Tindall, said that CBA’s latest cut further consolidated the bank’s position in the market.
“It sends a clear message to investors that the door is wide open for their business,” Tindall said.
“It will be interesting to see if any of CBA’s key competitors chase after it with investor rate cuts of their own. Westpac is best placed to do this with a gap of just 15 basis points between the lowest investor rates from each bank.
“With variable rates likely to come down further, easing the pressure on borrowers across the country, we could see banks’ appetite for investor loans increase.”
In addition to CBA, data showed that over a dozen other lenders have cut their investor loan rates by more than 0.25 percentage points since the second RBA’s rate cut in May.
Northern Inland Credit Union currently has the lowest variable investor rate at 5.49 per cent, followed by People’s Choice at 5.54 per cent, while Pacific Mortgage Group and Easy Street both record 5.59 per cent.
In total, data showed that over 30 banks have at least one variable investor rate under 5.75 per cent.
Tindall said the rate gap between investor and owner-occupier home loans is narrowing after years of divergence.
Since mid-2015, investors have typically paid more, driven by APRA’s investor lending restrictions introduced in late 2014, but recent RBA data shows the difference has shrunk to 0.22 percentage points, down from a peak of 0.37 in October 2022.
Tindall said the gap could narrow further if competition between banks continues to heat up.
“However, banks aren’t likely to be rolling out the red carpet to every borrower,” she said.
“They’re going to want quality investments, ideally where the rental return is still strong and the owner has a good track record of paying their loan on time.”
“If you’ve built up a decent deposit and have a solid rental return, now’s a great time to shop around. There are competitive deals out there, but you’ve got to hunt them down to get them,” Tindall concluded.
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