Lower interest rates are helping to produce growth in the residential property investment market. The value of new lending commitments to households rose 3.2 percent in August 2019, seasonally adjusted, according to the latest Australian Bureau of Statistics (ABS) figures. The rise in new lending commitments to households in August follows a 4.3 percent rise in July and a 1.8 percent rise in June 2019.
ABS Chief Economist, Bruce Hockman said: “In August, new lending commitments to households rose for the third straight month.” “Strong refinancing activity was seen for the second month in a row, while new lending commitments for investment dwellings recorded the strongest monthly growth since September 2016.”
The value of new lending commitments for owner occupier dwellings rose 1.9 percent nationally in August, with rises in all states and territories apart from the Northern Territory. New lending commitments for investment dwellings rose 5.7 percent in August, with Queensland (up 10.4 percent) and Victoria (up 9.5 percent) recording the strongest growth.
Much of the demand is coming from first-time property investors, say market watchers. “We’re seeing a lot of new investors coming in, encouraged by the lower interest rates, and they’re getting their loans approved far easier than existing investors,” says Your Finance Adviser lending specialist Raj Khatak.
The number of loans to owner-occupier first home buyers rose 5.2 percent in August, the strongest rise this year. Compared to August 2018, the number of owner-occupier first home buyer loan commitments were up 8.0 percent.
Investment loan policy and pricing have eased, making conditions more favorable, and lenders are competing aggressively for customers. The disparity between investment theory & interest and investment interest-only pricing of home loans is wide, but in recent times it has narrowed. The ABS data also showed a 4% monthly increase in the total value of home loans written to the owner-occupiers on the month prior.
Lower interest rates now favor the property investor. Property investing advice from finance expert guide you through each step of the way, you will find it very easy to transform your financial position very quickly.
