Housing finance approvals underline hot market

MAY 7, 2021

According to new figures released this month by the Australian Bureau of Statistics (ABS), new loan commitments for housing rose 5.5% in March 2021 to a new record high of $30.2 billion.


Lending to investors accounted for more than half of the March rise in housing loan commitments. The value of new loan commitments for investor housing rose 12.7% to $7.8 billion in March 2021, 54.3% higher than in March 2020.


ABS head of Finance and Wealth, Katherine Keenan, said: “Investor lending has seen a sustained period of growth since the 20 year low seen in May 2020. The rise in March is the largest recorded since July 2003 and was driven by increased loan commitments to investors for existing dwellings.”


Rates for owner-occupiers and investors are aligning


Craig Betalli, Senior Broker, Our Broker, said investors were a significant part of the mortgage market. “Around 50% of our loans are being approved for investors, and the bigger investor numbers might be due to lenders offering them interest rates similar to those paid by owner-occupiers.”


Around five years ago, the prudential banking regulator APRA cracked down on investment property loans especially interest only loans. For a significant period since, owner-occupiers benefitted from mortgage interest rates that were as much as 1% lower than the rates imposed on investors. 


“Whether it’s consumer-driven, or APRA has eased up on the regulatory brakes, more lenders are now beginning to align the rates offered to investors with those paid by owner-occupiers,” Craig said. 


“Moreover, if you are paying a rate that is significantly above those paid by owner-occupiers, then it’s time to make a move with the assistance of a finance specialist such as Our Broker.”


In addition, Craig said the discrepancy between the rates paid by an investor making interest-only repayments or principal and interest (P&I) has diminished. “This gap has evaporated, especially if the investor is using a fixed-rate loan,” said Craig. “Once again, if there is a large gap between the interest rates for P&I and interest only, then it’s time to start looking arou8nd with the help of a finance specialist.”


For all your mortgage needs or to discuss a home loan refinance, contact Our Broker today on 1800 913 677 for an obligation free discussion about your property.