Australian lenders’ tightening loan policies mean close to half of the nation’s property investors are struggling to qualify for loans, drawing business away from traditional lenders and forcing many to reconsider investing entirely, opening the market to offshore investors, according to Mortgage Choice.
According to an investor survey, 51 per cent of Australians believe investor activity will fall by the wayside in the next 12-24 months, while 42.6 per cent said their property investment plans had to be reconsidered thanks to heightened restrictions.
Mortgage Choice chief executive, John Flavell said the market was in a state of climactic confusion after the recent raft of changes in investment lending saw interest-only home loan rates skyrocket.
“Australia’s property market has become increasingly complex in recent months,” he said.
“I have never known the mortgage market to be this complex and confusing.”
In light of the playout of the Australian Prudential Regulation Authority’s (APRA’s) 2014 decision to cap investment lending growth at 10 per cent, Flavell said the news of low confidence in activity was not surprising.
“Australia’s lenders were forced to tweak their policy and pricing in a bid to cool the level of investor interest,” he said.
“Some investors are forced to look beyond their traditional lender in order to obtain finance, while others are choosing to reassess their intentions to buy a property and/or put their plans on hold indefinitely.
Looking ahead, Flavell confirmed Australians felt many investors would be forced onto the sidelines entirely and forced to withdraw from the market, but said some opportunity would present itself further down the line.
“There are a lot of changes afoot [but] there are still plenty of opportunities for investors,” he said.
“There are still a number of lenders in the market who are happy to write investment loans and are hungry for this type of business.”