Property investor lending breaks records (and first home buyers’ hearts)
Investors are rushing into the market, with growth in investor lending far outstripping loans for home buyers.
New ABS housing finance data shows a massive jump in investor lending in the last few months, leaving home buyers in the dust.
The number of new investor loans increased by 13.6% in the September quarter to a record high.
New loans for home buyers rose by just 2%. For first home buyers specifically it rose by 2.3%.
"Falling borrowing costs and low vacancy rates are favourable conditions for investors," said ABS head of finance statistics Dr Mish Tan.
In dollar value terms investor activity is up even more, with a 17.6% lift in the value of investor loans.
While overall there are still more home buyers than investors, the pace of investor activity is increasing far faster. And investors are spending more on property.
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Owner-occupier loan values are up by a smaller 4.7% and are still below their March 2022 peak.
But when combined with the record breaking investor activity it's enough to push the overall value of all home loan types to a record high.
"The number of investment loans has increased since March 2023, with investment loans reaching around 40 per cent of the total of new loans," said Dr Tan.
While inflation is still relatively high, falling interest rates and income tax cuts have put more money in many people's pockets. And it's encouraging people to borrow more, driving house prices up.
38% of Australians tell Finder that it's currently a great time to buy property, which is close to a record high.
This makes the market very attractive to investors.
Where does this leave home buyers?
Rising investor activity is disastrous for first home buyers. It's harder to compete with equity-rich investors with bigger deposits and multiple properties in their portfolios.
And while falling interest rates are a big help to first home buyers, rates fall for investors too.
Last month the federal government expanded the First Home Guarantee Scheme, allowing more first home buyers to enter the market with lower deposits and reduced borrowing costs.
This is a policy that won't help investors, at least. And the effects of the expanded scheme won't show up until the next quarter's data.
But when more first home buyers do rush into the market in the months ahead they'll be competing with a soaring number of investors with big pockets.
Sources
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