Investment lending bucks trend, nears record-high

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on November 01, 2021 Fact Checked
Investment lending bucks trend, nears record-high

The value of new loan commitments fell 1.4% in September 2021, led by first home buyers, down 5.6% according to ABS data.

Loan commitments to first home buyers fell for the eighth consecutive month in September 2021 - 11.4% lower compared to September 2020 in seasonally adjusted terms.

Overall owner occupier loan commitments fell 2.7%. 

This is contrasted with investor lending, up 1.4% to $9.62 billion, with positive growth unbroken since October 2020.

The value of investment lending was 83% higher than a year ago, and close to records seen in April 2015 when investors borrowed $10.08 billion.

ABS head of finance and wealth, Katherine Keenan, said the average loan size for owner occupiers has grown, however.

"The value of new loan commitments for owner-occupier housing fell for the fourth month in a row, to $20.7 billion in September," Ms Keenan said.

"However, this was 21% higher compared to a year ago and 49% higher than pre-COVID levels in February 2020."

CommBank economists said lending to first home buyers is down 22.9% compared to the peak in January.

"Affordability constraints are biting in the first home buyer space, with dwelling prices rising by over 20% on an annual basis," they said.

NSW residents borrow big

NSW owner occupiers borrowed an average of $750,000 in September - a record high.

Across other states, Victoria led the falls in loan commitments, with owner occupier lending down 12.7% and first home buyers down 17%. 

Investment lending in Victoria, however, was up 1.4%.

"Similar to overall owner-occupier lending, the largest fall in the number of first home buyer loan commitments was in Victoria which fell 17%," Ms Keenan said.

"New South Wales fell 3.1%. Western Australia had the largest rise of 5.9%, while Queensland rose 2.1% and South Australia rose 4.3%."

Refinancing tapers

For owner occupiers, the value of external refinancing fell by just over $1 billion to $10.62 billion in September, in original terms. 

Internal refinancing also fell, down to $5.84 billion.

This made for an average refinancing value of just under $469,000. 

For investors it was much the same, with total refinancing down to $9.48 billion for an average value of $520,389.

Lendi Group CEO, David Hyman, said the ABS data shows only 7.4% of active mortgages had been refinanced over the past financial year.

"This lack of action could cost Australians down the line, when they finally come to the realisisation that the low rates they once overlooked are no longer on offer," Mr Hyman said.

"History dictates that interest rates will not stay this low forever, and mortgage holders need to start preparing for this. The recent rates are as good as we’re likely to see for some time, while we've already stared to see an uptick in fixed rates by some lenders."


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Buying an investment property or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for investors.

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

VariableMore details
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Low Rate Home Loan - Prime (Principal and Interest) (Investment) (LVR < 60%)

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

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  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

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

  • Refinance only. Fast online application
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  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

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

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
AN EASY ONLINE APPLICATION

Yard Investment Loan (Principal and Interest) (LVR < 80%)

  • No application fee
  • Unlimited additional repayments
  • Unlimited free redraws
AN EASY ONLINE APPLICATION

Yard Investment Loan (Principal and Interest) (LVR < 80%)

  • No application fee
  • Unlimited additional repayments
  • Unlimited free redraws
VariableMore details
FREE REDRAW FACILITY

Smart Investor Home Loan (Principal and Interest) (LVR < 80%)

  • Option to add an offset for 0.10%
  • Fast turnaround times, can meet 30 day settlement
  • No on-going or monthly fees
FREE REDRAW FACILITY

Smart Investor Home Loan (Principal and Interest) (LVR < 80%)

  • Option to add an offset for 0.10%
  • Fast turnaround times, can meet 30 day settlement
  • No on-going or monthly fees

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. Rates correct as of November 27, 2021. View disclaimer.


Image by mastersenaiper 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 click through onto the web site links.

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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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