Buoyant property market boosts demand for investor loans

Font size :

A strengthening property investment climate has seen an increase in demand for line of credit (LOC) loans, according to Australia's biggest mortgage broker Mortgage Choice.

Mortgage Choice's April housing loan approval data found that LOC loans increased their overall share of all approvals by 2% over the course of the month to account for 11% of the mortgage market.

The broker also found an increased demand for standard variable home loans, which now account for nearly half (47%) of the market. Mortgage Choice attributed this sudden increase in popularity to the discounts that many lenders are now offering on standard variable loans of $150,000 or more.

Basic variable loans have also seen a monthly increase in their market share, rising from just under 16% to just over 19.5% - an increase of almost 2% on the category's six-month average.

Fixed rate loans have seen their market share drop significantly over the course of the month, falling by 13% in April, according to Mortgage Choice national corporate affairs manager Warren O'Rourke.

"There's no doubt that the higher pricing of fixed rates weighed heavily against demand, and a corresponding growth in variable loan products suggests that some borrowers are either chasing the discounts on variable rate products or are more comfortable about the direction of interest rates," O'Rourke said.

Meanwhile, the Mortgage & Finance Association of Australia (MFAA) has highlighted the benefits of mortgage refinancing, claiming there is a growing trend in the number of people intending to refinance their home loan.

The MFAA/BankWest Home Finance Index - a six-monthly home loan consumer survey - found that 60% of all respondents who had refinanced with another lender said they had benefited from the move.

"There are good and bad reasons for refinancing, depending on what you do with that unlocked equity. We found that home renovations and purchases of investment property rated high on people's reasons to refinance. These activities can grow the wealth of the borrower," said MFAA CEO Phil Naylor.

Nearly half of all respondents intended to refinance within three months due to interest rate increases, but the number of refinanced mortgages is actually declining, according to the MFAA. Naylor said this trend may well continue as people are dissuaded from refinance deals due to "a lack of information or fear".

Nearly a quarter of all survey respondents (23.2%) regarded all lenders as being the same, while 13% felt that changing lenders would involve too many fees.

"There's a level of apprehension among Australians," Naylor said. "Half the people surveyed experiencing mortgage stress were concerned that they may not find an alternative due to low equity in their property."

The MFAA pointed out, however, that refinancing isn't necessarily a golden ticket out of mortgage stress, highlighting the 53.4% of respondents who were struggling with their loan and had refinanced within the last three years.

"Refinancing isn't for everyone and the reasons for doing it need to be compelling," said BankWest's head of mortgages and savings Paul Vivian.

"When considering a change in loan, the interest rate isn't the only thing to look at. Also about 42% of the respondents who refinanced said they got better service and 32% received better loan terms and conditions or lower fees. One in four people reported that they had more flexibility, and a larger loan or limit," said Vivian.


Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker

Mortgage News and Articles

How to tell when a housing market is cooling How to tell when a housing market is cooling

You need to check clearance rates, listings, and the price gap, among other factors Read more

Growing demand for green apartments in Sydney Growing demand for green apartments in Sydney Both owner-occupiers and investors favour eco-friendly buildings for their energy-saving features and reduced environmental footprint ... Read more

Are property investors as rich as they appear? Are property investors as rich as they appear? A multi-property portfolio doesn’t guarantee easy millions ... Read more

Be proactive about getting a better mortgage deal Be proactive about getting a better mortgage deal Apathy could be costing you a considerable amount of money over the lifespan of your loan ... Read more

More mortgage news and articles

Sponsored Links

Wednesday, Sep 20, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
  • How much do you want to borrow?
  • How much deposit do you have?
  • How much is your house worth?
  • How much do you still owe on your mortgage?
  • What type of mortgage do you have?

  • How much is your new home?
  • How much do you want to borrow?
  • How soon do you want a mortgage?
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords