Rate hikes put off ‘rentvestors’

Mortgage Choice chief executive John Flavell said borrowers were finding it harder to receive financing for investment properties as lenders adjust interest-only and investment limits in line with regulatory mandates.

He said: “Australians are becoming increasingly concerned that they won’t be approved for an investment loan and, as such, are choosing to bide their time and put their property investment plans on the back-burner. 

“As a result, it is little wonder why we have seen such a drop off in the proportion of borrowers choosing to purchase an investment property before an owner-occupied home.”

Meanwhile, Deloitte financial services partner James Hickey told The Adviser that the housing market had seen growing numbers of first home investors, or ‘rentvestors’, but that restrictions on investor lending could inadvertently hurt first home buyers seeking a foothold in a “challenging” market.

He explained: “[Regulatory] restrictions being placed on the amount of investor lending and the amount of higher LVR lending … may have unintended consequences of impacting that end of the first home buyer market.”

It is important to “look at all aspects” of regulatory actions, Mr Hickey said.

“Not all investors are high-net-worth individuals with many properties. Many of them may well be people just trying to get their first rung on the property ladder,” he said.

Mr Flavell said Australians shouldn’t be daunted by the prospect of investing and that there is still “plenty of opportunity”.

[Related: APRA’s ‘one size fits all’ lending curbs are dangerous: HIA]