Property investors are back and in a big way

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on December 02, 2021 Fact Checked
Property investors are back and in a big way

ABS lending data shows a pullback in new loans written for owner occupiers but investors continue to flood the market.

ABS lending indicators data for October shows loan commitments to investors are up 1.1% in seasonally adjusted terms.

This was the highest level in more than six years according to ABS's head of finance and wealth, Katherine Keenan.

"The value of new loan commitments for investor housing has grown for 12 consecutive months, reaching $9.7 billion in October 2021," Ms Keenan said.

"This was the highest level since the all-time high in April 2015.

"While the value of investor loan commitments has grown 90% over the past year, the number of investor loans only accounted for 33% of all new loan commitments for housing in October."

Housing Industry Association economist Tom Devitt said this is why there doesn't need to be any extra lending resrictions targeted at investors.

“The continued strength in the owner-occupier market means that investor activity does not warrant a return to punitive restrictions on investors," Mr Devitt said.

Why are owner occupiers scaling back?

Overall, the value of new loan commitments for the month fell 2.5%, led by a 4.1% drop in owner occupier lending.

"The value of owner-occupier loan commitments fell for the fifth consecutive month, but remained 15% higher compared to a year ago and 43% higher than pre-COVID levels in February 2020," Ms Keenan said.

Among owner occupiers, the value of new loans to first home buyers also dropped 4.8%.

There was also a slight pullback in the average loan size for owner occupiers and for first home buyers, as seen in the chart below.

"The number of loans issued to first home buyers in October was 32.9% higher than the average of the past decade," Mr Devitt said.

"Despite this strong involvement of first home buyers, they are continuing to decline as a share of the market, as the impact of HomeBuilder erodes."

On the other hand, RBA data released Tuesday shows housing credit growth to owner occupiers reached a five-year high.

CBA economists expect owner occupier lending to pull-back further, and explained why.

"Higher fixed mortgage interest rates, APRA’s lift in the minimum serviceability buffer and affordability constraints are likely to see lending continue to drift lower," they said.

"Lending is a good leading indicator of dwelling prices and we expect dwelling price growth to slow in 2022 and for prices to fall in 2023."


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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Lender
Advertised rate Comparison rate* Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
FixedMore details
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
VariableMore details
ZERO APPLICATION FEES

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
ZERO APPLICATION FEES

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees

Rates correct as of January 17, 2022. View disclaimer.


Photo by sandid on Pixabay

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.

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