The Reserve Bank of Australia has warned landlords who are dominating the country’s real estate market – accounting for more than half of all mortgages – that the September rise in lending to investors could be a “sign of speculative excess”.

The risk for landlords is that a rise in bond yields and a continued slowdown in the rental market would spur a property sell-off, causing home prices to fall, a report by Bloomberg said.

“There’s a general hunt by investors for anything that’s got income yield,” said Louis Christopher, managing director of Sydney-based SQM Research Pty.

“That’s potentially dangerous and risky because at some point we’ll see global bond yields rise, cash rates rise and that will be a particularly dangerous time for investors.”

Rising prices helped boost total returns on residential property investments to 13.3% in all major cities as of 31 October, up from 12.6% in 2013.

These positive returns have prompted landlords to increase their borrowing, with mortgage approvals to investors jumping 25% to $11.9bn ($10.2bn) in September from a year earlier.