Market Update: Self-Managed Super Fund Interest Rates

Purchasing property inside a self-managed super fund has been a hot topic of discussion in the finance industry since inception. While the traditional strategies in investments such as listed shares, cash and deposit maintain a steady rate of growth, the ATO’s quarterly statistics report for March 2021 shows a significant increase in property under the self-managed super fund (SMSF) structure.

Over the March quarter the total value of residential property held by SMSF increased by 6.36% ($2.64 billion) totalling over $44.1 billion, while interestingly the limited recourse borrowing arrangement (LRBA) used to purchase the property also grew by 6.36% ($3.55 billion) to $59.4 billion.

The increase in SMSF lending across the board is due to several factors, with interest rate reduction and lender’s appetite at the forefront. Traditionally, the limited recourse borrowing within the super fund came with a hefty interest rate based on a risk appetite at any given time. Given the departure of the major banks in limited recourse borrowing, the remaining lenders historically faced minimal competition and therefore less pressure to reduce overall interest rates. However, with the recent resurgence in SMSF property purchases, lending institutions are remodelling the limited recourse borrowing pricing in order to receive a larger market share. Strategies such as lower interest rates and revised internal fees are making it easier and more cost effect for Australians to purchase a property within a SMSF or refinance their existing debt.

At Partners Lending we assist our clients with a wide range of lending options including residential, commercial, business and SMSF. If your clients are interested in taking advantage of the shift in interest rates on self managed super fund lending or would like more information on the above, contact a lending advisor from Partners Wealth Group today on 1800 333 143 to see how we can assist with getting approval in place so they can purchase with confidence.

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