Big Banks Luring Property Investors With Lower Deposit Borrowing Terms

After another interest rate rise this week, it’s getting harder and harder for investors to hit the property market.

To attract investors and keep momentum going, the bigger banks are improving their lending terms, allowing them to borrow with deposits as low as 5 per cent on principal and interest loans.

The Commonwealth Bank is one such major, halving their lending rates on offer this week from 10 to 5 per cent for investors.

RateCity research director Sally Tindall told The Australian that banks were confident investors could make repayments in the current environment of higher interest rates because they were getting such good returns on rental payments.

“The Commonwealth Bank have determined the risk and considered it’s appropriate to lend to investors with such small deposits,” she said.

“These borrowers must commit to paying principal and interest, something many investors are hesitant to do, and be willing to pay a higher interest rate.”

“The bank is likely to have recognised the strength of investors in the current climate and incredibly tight rental market.”

Ms Tindall said banks were currently more worried about owner-occupiers not servicing their loans than investors, despite investors traditionally being seen as more risky borrowers.

“Investors have been able to put up their rents to cope with the rate rises, owner-occupiers can’t do that,” she said.

“With vacancy rates at historic lows, investors are unlikely to be struggling for a tenant – a far cry from just two years ago when many investors were offering tenants reduced rents to help them get through lockdown.”

ANZ is another major bank that offers 5 per cent deposit loans but it does so with both principal-and-interest or interest-only terms for investors.

Westpac has similar low-deposit loans on offer for investors but NAB still requires a deposit of 10 per cent.

Ms Tindall said the move could drive up prices but it wasn’t the CBA or any other bank’s job to fix the country’s rental crisis.

“The question is in my mind that if investors are the safer borrowers at this time, why are they being charged higher rates?” she told The Australian.


Big four banks: lowest advertised variable rates for investors with a 5% deposit


Principal & interest,

5% deposit


5% deposit





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