The gap between home loan interest rates being offered by the major banks and the rest has effectively doubled according to comparison website Mozo.
The demand for finance from housing investors has started to slide, most likely off the back of tighter lending restrictions and recent interest rate hikes from banks.
The Turnbull Government is looking at the possibility of extending the GST to financial services to pay for a cut to the company tax rate.
An RBA official says Australian banks have understated the value of investor loans and it justifies the decision from regulators to crack down on investor loans.
The Reserve Bank has resisted the temptation to cut interest rates on Melbourne Cup day but has left the door open for more cuts in the future.