Property investors took out a whopping $2bn in mortgages in December, lured by surging property values and attractive yields, new data has shown. Strong buying interest from the top end of the property market also boosted sales by 15% compared to a year ago, according to AFG (Australian Finance Group).
Investors in Western Australia were the most bullish, accounting for 42.7% of the total loans sold in the country, while Queensland investors took out 37.4% of the total sales.
AFG also found that in addition to the strong home loan sales, borrowers are choosing to take lower loan-to-value ratio (LVR) mortgages. LVR is the proportion of home loan taken against the value of the property value. This led to loan LVRs falling to their lowest level ever recorded. Nationally, it fell to 62.8% from 65.5% in July 2007. WA recorded the lowest rate at 49.9%, Queensland dropped to 63.7% and NSW edged at 67.8% LVR.
Mark Hewitt, general manager of sales and operations for AFG said consumer concerns regarding rising interest rates is hurting low- and mid-level property buyers who have to borrow heavily to buy their own homes and who typically will take high LVR loans.
"As these buyers leave the market, we see LVRs fall. However, the top end of the market is still relatively strong, and here people are using the accumulated equity in their homes either to upgrade or to buy investment properties," he said.
Fixed interest rate mortgages remained popular with one in every four borrowers opting for this type of loan in December.
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