Warnings of slowing growth, compressed rental yields, affordability issues, and potential bubbles are doing nothing to deter investors.
Indeed, last month saw investor demand for mortgages reach record highs, according to new data from mortgage broker AFG.
Investors accounted for 40% of all new home loans – which was a significant contribution to the unprecedented total of $4.2 billion worth of mortgages processed in May.
AFG director Kevin Matthews said that, while investor activity has been very strong throughout 2014, May was the first month that two out of every five new home loans were for investors.
Despite a post federal budget fall in consumer confidence, continuing low interest rates were a key factor in encouraging property investment, he said.
“Also, recent independent research shows that one in two borrowers are now using mortgage brokers, which no doubt also contributed to the record result.”
AFG’s data for different states, over May, showed that:
- With 49%, NSW recorded the highest investment volumes in the country. Over most of the past year, nearly one of every two NSW home loans has been for investment purposes.
- Investor demand in Victoria hit accounted for 40% of all new home loans. This is the highest such figure AFG has ever recorded by AFG in Victoria.
- There has been a steady rise in investor activity in Queensland over the last three months: 39% of all new home loans went to investors.
- In South Australia investors accounted for 34% of mortgage volumes.
- Mortgage demand from investors in Western Australia hit 31%.
Matthews said that, nationally, first home buyer activity was sitting steady at 10%, although there was a wide disparity between states depending on whether FHB grants were available.
“For example, in WA, where there are grants, FHBs comprise 22% of all new home loans, where as in NSW, which doesn’t have grants, FHBs comprise just 3.5%.”
It was also worth noting that non-major lenders had recaptured some of the gains made by major lenders, Matthews added.
“They took 25% of all new home loans. Most of these gains were in the FHB market where the share of non-major lenders rose to 30%.”
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