IO fixed rate loans predicted to come down ‘in the next few weeks’

“Property investors are people who particularly take advantage of interest-only loans, often for tax reasons, and the fact that the number of interest-only loans has plummeted is very telling,” Ms Tindall said.

“APRA asked [the banks] to cap all new interest-only lending to 30 per cent, and they’re down to almost 15 per cent. So, what we believe we’ll see is interest-only rates coming down as a result of this overshooting the mark.

“We’ve already seen the big four banks cut fixed rates for interest-only lending, and I do think we’ll see more rate cuts to come in the next few weeks.”

Simply put, she said future investors could be able to get cheaper rates, especially fixed rates.

“We’ve already seen a raft of changes come through, so in the last … month, we’ve seen all four of the big banks cut fixed interest-only rates, but there’s plenty more that they can cut, and we’re expecting that that gap between what someone pays on an interest-only loan versus what they pay on an principal and interest loan will narrow,” she said.

“Currently if you’re an investor and you want to pay interest-only, on average, you’re going to pay 39 basis points more. We believe that’s going to decrease over the coming months as the banks look to open up their books again to interest-only lending.

“In terms of fixing, we might see further cuts in that arena, in the fixed rate arena, but it really depends if you like the security of a fixed rate low more than anything else.”

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