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‘Greedy banks’ blamed for rent rises

By Staff Reporter
05 July 2022 | 1 minute read
Kevin Young reb

The latest RBA cash rate decision has highlighted the hefty mortgage premiums facing landlords.

According to Property Club president Kevin Young, it’s Australian banks that are to blame for a portion of recent rental price hikes.

With average capital city rents jumping by nearly 17 per cent over the past 12 months, Mr Young said that “tenants are now being punished with higher rents because the greedy banks are ripping off property investors with outrageous interest rates”.

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He explained that until recently, “interest rates for interest only loans for investors were exactly the same as principal and interest loans for owner occupiers”.

“The greedy banks in Australia saw an opportunity to charge a premium for investor interest only loans which never happened in Australia before,” Mr Young said.

According to the president, some major banks are now charging a premium of over 0.5 per cent for this type of loan.

“Based on an average of a 0.3 per cent premium charged by the banks for interest only loans, mum and dad investors who took out an interest only loan during the past year, collectively bloated bank profits by well over $200 million,” Mr Young shared.

From his perspective, Australian institutions should be encouraging more investors back into the property market in an effort to increase the supply of rental properties.

“Instead, with overall interest rates rising, this bank-rip off for interest only investor loans is making it more difficult for people to buy investment properties for rental purposes,” he said.

He warns that this banking landscape will only worsen the rental crisis in Australia, and he has called on the Labor federal government to disincentivise banks that are profiting from investor premiums.

“Property Club is calling on the new Labor federal government to impose an interest only tax on the banks unless they return interest rate parity with interest only and principal and interest loans for investors,” he concluded.

‘Greedy banks’ blamed for rent rises
Kevin Young reb
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