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Suncorp Group Ltd is the first bank to lower investor mortgage rates

Suncorp Group Ltd (ASX: SUN) is the first of the banks to lower interest rates for investor loans in housing, following the removal of the 10% annual cap by the Australian Prudential Regulation. The cap, imposed in 2014 to try and cool the overheated property market, will no longer apply to Authorised Deposit-taking Institutions on the back of improved lending standards. The cap successfully led to lower annual growth in investor housing credit. The cap of 30% on interest-only loans relative to totally new mortgages remains in place.

Suncorp, which provides banking, insurance and wealth management, is trading on forward price- earnings-ratio of 18x and is paying fully franked annual dividend of 5%.

While, Insurance Australia Group Ltd (ASX: IAG), a general insurance group operating in Australia, New Zealand and Asia, is trading on a forward PER of 19x and is paying an annual dividend yield of 4%, fully franked.

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Motley Fool contributor Rosemary Steinfort owns shares of Suncorp Group Limited. The Motley Fool Australia owns shares of Insurance Australia Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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