Home News Higher mortgage costs are discouraging investors

Higher mortgage costs are discouraging investors

Font size :



Higher mortgage costs are starting to weaken demand from investors in the housing market, according to CoreLogic. Investor demand is expected to continue slowing in the coming months, which could further dampen the pace of value increases in Sydney and Melbourne.

However, the slowdown in investor demand could be temporary if limits on lending ease and investors return in full force to the market, CoreLogic warned.

Towards the end of March, the Australian Prudential Regulation Authority (APRA) imposed new limits on interest-only mortgage lending in an attempt to reduce risks in the Sydney and Melbourne housing markets. Going forward, lenders would have to restrict higher-risk interest-only loans to 30% of new residential mortgages.

Additionally, banks have been busy rolling out out-of-cycle interest rate hikes, many targeting borrowers looking for interest-only home loans.

Prices in the east coast capitals were accelerating sharply before dropping last month, according to the latest data from CoreLogic.

“The mortgage rate premium for investors appears to finally be biting into the market with weakness in both total investor credit and investor housing finance commitments,” said Cameron Kusher, head of research at CoreLogic. “It remains to be seen if this slowdown lasts or, if once the rationing of credit eases, the investor segment of the market returns to residential property.”

Even though the Reserve Bank has cut the official cash rate twice since August 2015, investor mortgage rates are five basis points higher now than then, CoreLogic said.

“We anticipate that investor demand will continue to slow over the coming months. We’re seeing lenders reprice mortgage rates for investors and we are yet to see the full impact of the policy changes designed to slow the level of interest-only lending,” Kusher said.
 

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

New social housing aims to transform Ivanhoe Estate New social housing aims to transform Ivanhoe Estate

The sprawling redevelopment aims to boost the supply of affordable housing in Sydney Read more

A new suburb will be built in west Melbourne A new suburb will be built in west Melbourne Mount Atkinson will become home to more than 22,000 people over the next 15 years ... Read more

Surging house prices threaten liveability in Melbourne Surging house prices threaten liveability in Melbourne Analysts warn the city could become just as unaffordable as Sydney, if property trends continue ... Read more

More Aussies would benefit from regional hubs linked to cities More Aussies would benefit from regional hubs linked to cities Shorter commutes could spur higher home sales in regional towns, analysts say ... Read more

More mortgage news and articles

Sponsored Links

Saturday, Aug 19, 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?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords