All this talk about property investors going to P & I loans show how the regulators just don't understand the real market place.
The comment: Tindall said. “That said, not all investors are making the switch – people looking to maximise negative gearing are likely to stick it out with higher rates.” What a dumb statement and shows Tindal's lack of understanding of tax and cash flow.
The majority of Property Investors are going interest only to minimise the out goings and increase their cash flow, while managing their tax deductions. The principal part of the repayment is not tax deductible and investors don't choose to pay higher rates to maximise negative gearing. P & I repayment are still much higher than interest only repayments, even at a higher interest rate. Why would you pay off a tax deductible debt while you have a non tax deductible debt, like a home loan. Any good accountant would advise to pay off the non tax deductible debt first.