Investor lending tumbles despite rate cut

By |
Housing finance activity was flat in February with investor lending recording a surprise tumble, the latest official figures reveal. 

According to housing finance statistics released by the Australian Bureau of Statistics, the total value of home loan finance commitments dropped 1% in February. However, the value of finance for investors, which has been driving housing market activity over the past year, tumbled 3.4% over the month.

Craig James, chief economist at CommSec, said this was a surprising result given the Reserve Bank cut the cash rate to 2.25% in February.   

“It does seem to suggest that potential home investors are taking heed of the Reserve Bank’s warnings on over-leveraging in a low interest rate environment, in conjunction with the changes announced by APRA earlier this year,” he said.

However, James says it could also be a strategic decision by property investors, as the decision to cut rates indicates a shift in the Reserve Bank’s mindset.  

“Importantly the February rate cut provided a clear shift in mindset. Prior to the February Reserve Bank Board meeting the discussion centred on the likelihood of a rate rise later in the year. Now the discussion is on further rate cuts and a clear shift to an ultra-low rate environment over the next year. And as such it is likely that housing activity will continue to strengthen over the coming year,” he said.

According to the Real Estate Institute of Australia (REIA), the overall flat finance figures simply suggest that the boom is coming out of the housing market. 

“The February 2015 lending figures indicate a market that is moderating with February being the fifteenth consecutive month of modest drops in lending levels if refinancing is excluded,” REIA President, Neville Sanders said.

“With moderating housing lending and GDP growth below trend, the concerns of an overheating property market should be laid to rest.”


With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

Top Suburbs : redcliffe , westbrook , ferntree gully , willoughby east , artarmon

go back

Get help with your investment property

Do you need help finding the right loan for your investment?

When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus and appointment is free.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here