Mortgage brokers are facing a more complex investor market as higher mortgage rates, tighter lending rules, and looming tax changes reshape borrowing capacity and strategy.
Herron Todd White’s latest Month in Review point to investors becoming more yield‑focused, even as rental markets remain undersupplied and vacancy rates low.
HTW CEO Peter Maloney (pictured left) warns that tax settings could be a crucial swing factor for property investors.
“Any changes that reduce the after-tax return on residential property could dampen investor appetite precisely when rental supply is already under severe strain,” Maloney said, urging policymakers to weigh rental supply impacts carefully.
With the cash rate at 4.1% and repayments still biting, many investors are now prioritising stable income over purely chasing price gains.
Dual‑living configurations and regional markets in Queensland and Western Australia, where yields are often higher than in the major capitals, are drawing more attention from property investors looking to stabilise serviceability and protect their borrowing capacity.
APRA’s move from monitoring to enforcing debt‑to‑income caps is now a defining constraint for many borrowers.
The regulator’s tougher stance is cooling activity among highly leveraged “mum‑and‑dad” investors while favouring clients with strong equity positions, and cleaner balance sheets. New construction remains a notable exception, with relatively more accommodating finance conditions.
“The Australian residential investor market is diverging from what we have seen over recent years, evolving into a more selective, constraint-driven landscape – one where strategy and location choice are becoming increasingly critical,” said Drew Hendrey (pictured center), HTW’s managing director of residential.
At the same time, speculation ahead of the May federal budget on changes to the Capital Gains Tax discount and negative gearing is influencing sentiment among both property investors and owner‑occupiers.
Beyond mainstream investors, HTW also points to shifting dynamics in prestige and retail property.
HTW’s Prestige Index now sits at 65 out of 100 nationally, masking “hot” conditions in Brisbane and Adelaide and more balanced or buyer‑leaning markets in Sydney and Melbourne. Shifts at the top end can be an indicator for broader buyer confidence, particularly for complex, higher‑value deals.
On the commercial side, retail property is emerging as a relative bright spot, with HTW associate director Nathanial Ramage (pictured right) noting that “Values and rents have largely reset after the corrections which occurred from 2022-2023.”
Finally, HTW highlights rising systemic mortgage fraud, including borrowers empowered by generative AI to misrepresent property details and imagery. The firm stresses that the only unbiased valuation remains a physical inspection by a qualified valuer.
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