Investment lending soars 20%

by Miklos Bolza06 Apr 2017
The number of people looking for investment loans online has shot up over the past half a year, according to the latest analysis from consumer ratings agency CANSTAR.

At the time of the company’s September 2016 Star Ratings, the national average for investors since the beginning of 2016 was 15%. This has then increased by 20% in the most recent March 2017 Star Ratings, rising to 18% across Australia.

Belinda Williamson, spokesperson for CANSTAR, told Australian Broker that she could only speculate on the reason behind this increase.

“Investors tend to be more astute financially and our latest website traffic shows that they are looking at the market and comparing their options to make sure they’re not paying too much.
“The recent investment loan interest rate rises and news of lenders scaling back on investment lending may actually drive more investors this month to look at their current loan to decide whether it’s still the most competitive option for them.”

Figures across Australia showed that NSW and Tasmania had the highest proportions of investor lending inquiries:
State  March 2017 September 2016
NSW 21% 16%
Tasmania 21% 15%
Victoria 19% 16%
South Australia 18% 16%
ACT 17% 14%
Western Australia 16% 15%
Queensland 16% 12%
National average 18% 15%

Fixed versus variable

The most recent figures from CANSTAR show a 50/50 split between consumers seeking fixed versus variable home loans. This was an increase compared to September 2016 when 41% of potential borrowers were looking for fixed loans.

“The even split between fixed and variable rate searches at present gives some indication that while there is sharp interest in the extremely low fixed-rate options available, the majority of borrowers are not being heavily swayed by the recent rate movements by the major banks or a possible rise in the official cash rate to opt for a fixed-rate loan,” said CANSTAR group manager of research and ratings, Mitch Watson.

Williamson told Australian Broker that there had been a number of changes in the percentage of visitors searching for fixed versus variable rates during the past year.

“In April last year, the split was 54% of searches for variable and 46% for fixed. However, in August 2016 at the time of the last RBA rate cut, this had increased to 61% of searches for variable and only 39% for fixed. 

“Since August, we’ve watch the number of searches return to an even 50/50 split, with March figures showing exactly 50% of searches for variable and 50% of searches for fixed.”

Loan volumes rising

Consumers are also borrowing more, with CANSTAR analysis finding that 55% of people seeking loans between $301,000 and $650,000 as of March 2017. Eighteen per cent of potential borrowers were looking for a mortgage greater than $651,000.

Williamson said that these figures had remained fairly steady over the past year.

“However we did see a small increase month-on-month since the rate cut in August 2016 in the number of visitors to our website searching for a loan amount over $1m.”

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