Investment changes fail to deter property investors

August 14, 2015
Peter Dall

New data shows majority of investors still keen on property 

Despite the fact that many of Australia’s banks are making sweeping changes to their investment lending policy and pricing, a majority of potential investors are still keen to make their mark on the property market. 

New data from Mortgage Choice’s 2015 Investor Survey found 54% of potential investors would still look to push ahead with their investment plans despite the fact that many lenders are actively making it harder for some investors to purchase property. 

Local Mortgage Choice owner, Peter Dall said it is clear that the majority of investors still see property investment as a lucrative investment strategy and a clever way to future proof their wealth. 

“When we asked potential investors whether or not now was a good time to invest, more than 70% said yes, which goes some way to explaining why so many potential investors are not deterred by the spate of pricing and policy changes being made by many of Australia’s lenders,” he said. 

In recent weeks, many of Australia’s lenders have made some sweeping changes to their investment lending policies, including but not limited to restrictions on maximum loan-to-value ratios, the removal of discretionary pricing on investment loans and increased floor rates for loan servicing. 

Further, over the past week, a number of Australia’s major lenders have announced their plans to increase their interest rates for investors, with one lender actually increasing its investor interest rates by 47 basis points. 

While these changes will impact all investors, Mr Dall said it is the first timers and mum and dad investors who are ultimately hardest hit. 

“Our data shows an increasing number of investors are actually Gen Y’s who are purchasing property for the first time. For many younger buyers, purchasing an investment property before an owner occupied property gives them the opportunity to purchase where they can afford while still living where they want. 

“We should be encouraging these people to buy property, not hindering them at every turn. Unfortunately, the changes many of the lenders are making are putting these buyers off.” 

Drilling further into the data from the 2015 Investor Survey it is clear that younger buyers are more likely to be affected by the recent spate of investment changes to policy and pricing.

“While on average 54% of investors said the changes wouldn’t affect their investment plans, the story was a little different for Gen Y buyers,” Mr Dall said. 

“Just 45% of those born between 1980 and now said the investment changes wouldn’t affect their property plans, meaning most would be affected by the changes. 

“Baby boomers by comparison, were far less likely to be put off by the changes, with just 30% saying any changes would affect their property investment plans. 

“If lenders are going to continue to make substantial changes to their investment lending policy and pricing, they need to consider who they are trying to impact. If the goal is to stop first home buyers and mums and dads from purchasing investment properties, then mission accomplished. 

“If lenders are just trying to curb their overall level of investment activity, then perhaps they should consider pulling other levers that will impact cashed-up investors and foreign investors.”

 

If you would like learn more about your home loan or financial advice options call 0414 583 233 or visit www.mortgagechoice.com.au/peter.dall

 

Table 1: Financial obstacles

Many of Australia’s lenders have been making it harder for potential investors to obtain finance. Does this news affect your property investment plans?

National

NSW

VIC

QLD

SA

WA

Yes

46.0%

49.8%

44.4%

47.1%

46.3%

44.3%

No

54.0%

50.2%

55.6%

52.9%

53.7%

55.7%

 

Table 2: Financial obstacles by generation

Many of Australia’s lenders have been making it harder for potential investors to obtain finance. Does this news affect your property investment plans?

Gen Y (Born 1980 - 1995)

Gen X (Born 1965 – 1979)

Baby Boomers (Born 1946 – 1964)

Builders (Born 1925 – 1945)

Yes

54.5%

42.8%

30.9%

40.0%

No

45.5%

57.2%

69.1%

60.0%

 

Table 3: Investor attitudes

Do you think now is a good time to be a property investor?

National

NSW

VIC

QLD

SA

WA

Yes

71.8%

65.2%

72.2%

81.6%

77.1%

63.0%

No

28.2%

34.8%

27.8%

18.4%

22.9%

37.0%

 

 

For further information, or to arrange an interview, please contact:

Peter dall

Mortgage Choice

0414 583 233

peter.dall@mortgagechoice.com.au

                                                

*About the survey

Market research company Nine Rewards was commissioned by Mortgage Choice to conduct the 2015 Investor Survey. The online survey was conducted in July 2015 and completed by 1,025 Australians who were planning to purchase their first investment property in the next two years or recently purchased their first investment property.

 

Important information

This article is for general information purposes only. It has been prepared without considering your objectives, financial situation or needs. You should, before acting on the advice, consider its appropriateness to your circumstances.

 

 

Posted in: Property investment

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