With some lenders reluctant to cut rates for SMSF loans, despite now having reduced loan volumes, one non-major bank has announced it will be reducing its interest rate for SMSF loans by 15 basis points.
“The AMP SuperEdge variable loan will be reduced by 15 basis points to 5.87 per cent per annum,” an AMP spokesperson told SMSF Adviser.
AMP also announced the AMP SuperEdge three-year fixed loan will drop by 82 basis points to 5.29 per cent per annum. The changes are effective from 18 January.
Speaking to SMSF Adviser, Thrive Investment Finance's director, Samantha Bright, said SMSF loans are in most cases unlikely to see the types of offers being introduced for standard investment loans recently, with some lenders and banks having ceased SMSF lending entirely.
Ms Bright said while she hopes to see a loosening around SMSF loan policy as lenders “are within their APRA targets this year”, she believes lenders are reluctant to open up options for SMSF lending, or re-enter SMSF lending at all, because they are concerned about generating high loan volumes.
It is easier for lenders to gradually increase lending or “slowly open the gate” through making smaller adjustments to their standard investment loans, compared with changing their offers for SMSF loans, she said.
“If they open SMSFs, because the options are so few, you’re going to start channelling a higher volume and that’s where I believe they’re getting scared they’re going to hit their APRA targets,” she said.
Just last week, SMSF Adviser reported that Heritage Bank had increased its loan to value ratio limit from 80 per cent to 90 per cent for investment loans, while Suncorp discounted its interest rates across its Home Package Plus products by up to 1.55 per cent.
Suncorp announced no discounts for SMSF loans, however.
She also said the reluctance for banks and other lenders to make offers or discounts for SMSF loans could be related to the fact that under regulatory guidelines, they have to hold more capital aside for SMSF loans than for investment loans.
“It’s a drain on their capital and that’s why we’ll never see rates the same as standard investment loans,” she said.