QBE increases investor rates

One of Australia’s largest providers of lenders mortgage insurance has made changes to its premium rates for the first time since 2013, including a rise in premium loading for investors.

QBE has announced that it has made changes to its LMI premium rates “for the first time since 2013”, as a result of changes to risk. 

The changes include discounts for owner-occupiers and increases in premium rates for investors.

The insurer noted that while there are no fees charged, the minimum premium has increased to $950. 

This should reportedly not impact any new loans, but only affect existing property owners looking to increase their existing loan for purposes such as home improvements. 

A QBE Australia spokesperson told Mortgage Business: “The cost of insurance premiums is designed to reflect the risk we assume and the amount will vary depending on how much money is being borrowed from the lender, the type of loan being taken out and the size of deposit… 

“We’ve reduced the insurance premium rate for people borrowing more than $1 million.

“Our experience shows that first home buyers perform better than our average portfolio and we are pleased to continue to provide an 8 per cent discount to this segment and help people achieve their dream of home ownership. 

“The premium loading for investors has increased to 12 per cent [from 7 per cent], reflecting the increased risk compared to lending to owner occupiers.” 

The spokesperson said that QBE believes the changes “remain competitive and offer a valuable alternative to would-be property owners saving a 20 per cent deposit, thus enabling people to get a home sooner than would otherwise be possible”. 

They added that the company would continue to review pricing “regularly” to ensure “ensure fair and reasonable pricing for the risk we take on”. 

Investors have been increasingly targeted in recent months, following on from the introduction of APRA’s 10 per cent speedbump in lending growth. In the current record-low interest environment, there have been speculations that this limit could be lowered further – especially in the face of new figures that showed that investment housing loans rose by 0.58 per cent to $536 billion in November 2016.

[Related: APRA urged to ‘intensify’ investor lending crackdown]

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Annie Kane

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