Have you seen your new repayment yet? | CRE Finance

Benchmark increases are starting to bite, however savings are available....

Recent RBA rate rises are now becoming effective in variable rate loan repayments

There is often a 1- 3 month lag before each increase becoming visible in your account.

On 7th September increased to from 1.85% to 2.35%, the majority passed on 0.5% with some passing 0.6% however this increased wont be fully visible until November or December 2022 repayment cycles (Merry Christmas).

We are however noticing large rate disparity between bank pricing for existing customers depending on where your loan sits across the below 5 categories.

1. Property use - owner occupier vs investor

2. Lender type - major vs minor vs non-conforming

3. Repayments - principal + interest vs interest only

4. LVR - above or below 80% LVR

5. Loan features - offset account, splits and redraws

There is currently up to 2-3% difference between lenders for the same product types, see a recent example.

• Residential investment property held in company as trustee entity

• Purchased October 2020 for $1,120,000 and tenanted @ $3,683 PCM

• August 2022 valuation $1,295,000

• Loan amount $840,000 I/O

Repayment timeline over last 2 years;

• October 20 non-bank rate : 4.2% - repayments $2,940 PCM (cash flow positive)

• August 22 increased rate : 6.7% - repayments $4,690 PCM (cash flow negative)

• September 22 Big 4 rate 4.49% - repayments $3,143 PCM (cash flow positive again!)

This customer has gone from cash flow negative -$1,007 per month to positive $540 by workshopping their self-employed scenario from a non-bank back into Big 4.

As at (today), this is an interest saving of $18,546 per annum !!!

Contact us today to find out your options.

Tim Allen

Commercial Real Estate Finance Pty Ltd

0422043443

tim@crefinance.com.au