take advantage of record low interest rates, as well as their extra wealth, as younger buyers find themselves excluded from the booming property market. According data issued by the Australian Bureau of Statistics, for a third month in July, growth in investment mortgage loans dominated new home loans, as their commitment to mortgages increased by 1.8 per cent, while new mortgages obtained by first-time buyers slipped by a staggering 7.6 per cent. Those of owner-occupier’s also dropped by 0.4 per cent, the agency revealed.
Over the recent months, pandemic-induced lockdowns in Melbourne and Sydney took the steam out of emerging signs of recovery in investor activity in the housing sector. Therefore, the latest figures will offer the much needed reassurance, particularly for the development industry who are eagerly waiting to get their new projects out of the ground.
During the 12 months which ended in July, new investor mortgage loans for existing dwellings escalated by 48 per cent to $66 billion, while home loans for new housing also increased by almost 22 per cent to $7.3 billion, during this period.
According to experts, given the positive response from investors to rising prices, regulators will be forced to consider the need to tighten the reins on lending policies.
“It… points to a further acceleration in housing debt, a further rise in the share of interest-only loans and increasing lending at high loan-to-valuation ratios,” AMP Capital chief economist Shane Oliver said. “All of which will maintain pressure on the Reserve Bank of Australia and [banking regulator] APRA to move to tighten lending standards in order to head off increasing risks of financial instability – albeit they are likely to wait for the dust to settle from the latest lockdowns before moving.”
