Almost two-thirds of mortgage brokers are expecting investor demand for housing finance to spike in 2020, in line with a continued rise in dwelling values, according to research.
Research from mortgage marketplace HashChing, which involved a survey of its broker network, has revealed that 64 per cent of respondents are expecting investor demand for home loans to surge in 2020.
The rebound in investor demand is expected to coincide with a continued increase in residential property prices in Sydney and Melbourne, as predicted by 68 per cent of broker respondents.
According to the surveyed brokers, the bump in investor demand and the continued rise in home values would be underpinned by a lower interest rate environment. Of the surveyed brokers, 76 per cent are expecting at least one additional cut to the cash rate from the Reserve Bank of Australia (RBA).
Among the respondents predicting additional cuts to the cash rate, 40 per cent have predicted one additional cut, 36 per cent have predicted two, and 24 per cent expect the cash rate to fall to zero or below.
Reflecting on the findings, HashChing CEO Arun Maharaj said the increase in investor activity would challenge demand from first home buyers (FHBs), who, 80 per cent of broker respondents said, increased their appetite for finance in 2019.
“It’s clear that investors took a step back in 2019,” he said. “With such optimism around prices and the government stepping in and loosening credit restrictions, it’s hard to argue with brokers that first home buyers will once again find themselves competing with investors, especially in the Sydney and Melbourne markets.”
Mr Maharaj said the government’s First Home Loan Deposit Scheme won’t be enough to assist FHBs seeking a home in Sydney and Melbourne.
“We expect this will be oversubscribed, and whilst 10,000 places is small in the context of the entire Australian market, it will help keep the FHB group competitive, especially outside of the Melbourne and Sydney markets,” he said.
“Inside of Sydney and Melbourne, first home buyers will struggle to utilise the scheme. The $700,000 NSW and $600,000 Vic price caps will soon be surpassed by virtually all properties within commuting distance of the respective CBDs if price rises continue in 2020.”
He concluded: “All these factors combined means it’s never been more important for the first home buyer group to have a good broker on their side, to make sure they’re getting the right rate and crucially the right advice, especially as competition increases.”
[Related: Call for brokers to help regional businesses]
The leading lights of the broking industry from across NSW and AC...
The SME lender has announced changes to its leadership team follo...
The neo-lender has reported a $12.9 million loss in the six month...