After a brief hiatus, investors are returning to the market undeterred by the rising cost of borrowing, according to the latest report by mortgage broker Australian Finance Group (AFG).
The number of loans taken out for investment purposes rose for the second month in a row in April to 7,125 - accounting for 33.2% of all mortgages sold in the month. This level is roughly the same as recorded in December 2007.
Overall sales rose by 9.65% month on month; however volume fell by 6.6% compared to a year ago. Property market activities remained buoyant in Melbourne, with mortgage sales surging by 28.7%. Buying interests have also picked up in NSW with sales jumping by 12.5%, and by 11.8% in South Australia.
Borrowers have shunned fixed rate loans, with sales plunging by 25% on expectations that the rate rise cycle has already reached its peak. The level of refinancing has also eased from 39.3% of all new mortgages sold in March to 35.9% in April.
Mark Hewitt, general manager of AFG sales & operations, said that while the numbers weren't definitive, if the trend continues it will show that home loan buyers believe we're at the top of the rate rise cycle. "What's also clear is that, after many years of double-digit growth, the home loan industry has slowed," he said.
"Many analysts are predicting that for only the third time in 20 years, home loan growth will be below 10%. We believe there'll be minimal or possibly no growth in home loan lending for the balance of 2008."