The customer-owned bank said it would slash rates on a range of investment principal and interest and interest-only home loans from tomorrow.
A spokesperson from Heritage Bank told Canstar the rate cuts for new customers was a move intended to grow the business and that the bank was happy to sacrifice a bit of extra income to boost its investment loan numbers.
However, the spokesperson said the bank has not ruled out extending rate cuts to owner-occupiers later down the track.
“We can’t rule it out or in at this stage, but we’re certainly always reviewing our rates to try and give better value where we can,” the Heritage Bank representative said.
The largest rate reduction is to Heritage Bank’s Discount Variable interest-only investor home loan that is available for loans of more than $150,000 with a deposit of at least 10% of the purchase price. The interest rate will drop 0.32 percentage points to 4.42% (*comparison rate 4.47%).
Fixed home loans for investors paying interest-only on their repayments will also be reduced, with cuts of 0.15 percentage points across the bank’s one and two-year fixed Standard Fixed and Home Advantage Fixed loans.
The bank’s headline standard variable rate for investors will remain unchanged at 5.74% (*comparison rate 5.88%).
AMP Bank recently cut interest rates on a number of its investment property loans in a bid to attract new borrowers after the Australian Prudential Regulation Authority removed interest-only home loan restrictions for most lenders on January 1.
For nearly two years, lenders were limited by the amount of interest-only mortgages they could issue as the banking regulator cracked down on risky lending.