BRISBANE (CU)_Over the recent months investors in Australia have been rushing back to the country’s hot residential property markets, as prices continue to reach record highs. Easing of pandemic-induced restrictions, together with the removal of rental moratoriums are expected to see demand continue to increase over the rest of the year. According to property market analyst CoreLogic, new investor loans increased by a whopping 48 per cent in the month of August, from a year earlier, with financial service providers lending around $9.75 billion during this month, the highest amount in six years.
On the other hand, earlier this month, regulators announced a home loan crackdown aimed at owner-occupiers, with the Australian Prudential Regulation Authority (APRA) informing mortgage lenders that it will be increasing the minimum interest rate buffer from 2.5 to 3 percentage points. This means that lenders will be battling it out to attract property investors, enabling them to shop around for the cheapest offer instead of an average rate, thereby slashing their monthly repayments by nearly half.
According to Canstar, a Brisbane-based research agency and financial comparison site, by switching to the lowest variable of 2.38 per cent, from an average variable rate of 3.45 per cent, an apartment investor who borrows an average sum of $555,000 on a principal-and-interest loan for 30 years, with a 20 per cent deposit, can save more than $5000 a year. If this investor is to switch to the lowest one-year fixed rate of 2.27 per cent, he could reduce another $500 a year from his monthly payments. On the other hand, an interest-only investor could save more than $7300 a year by switching to the lowest variable rate of 2.40 per cent, from the average 3.71 per cent.
“The green shoots of recovery in unit rentals are appearing around the country and Australia opening to the world should see the comeback consolidate,” Canstar’s group executive Steve Mickenbecker said.
