A fifth of investors are unable to refinance at an amount they were previously able to borrow, according to a new survey.
A survey published by the Property Investment Professionals of Australia (PIPA) has found that the top two leading concerns of property investors in Australia are the current economic conditions, and gaining access to lending.
The PIPA Annual Property Investor Sentiment Survey, which spoke to 800 property investors online during August, confirmed that these two factors remain the top two concerns of investors.
It found that 22 per cent of the investors interviewed were unable to refinance their homes for an amount they could previously borrow; a similar proportion to last year.
Interestingly, however, more investors are finding that they can refinance now when compared to last year.
The percentage of those who could refinance grew by 7 per cent compared to the last PIPA Annual Property Investor Sentiment Survey, with half of this year’s respondents reporting that they were able to do so that PIPA said could be a “sign of the improved lending conditions”.
Indeed, recent ABS data for July 2021 shows that investor loan commitments have gone through an unbroken period of growth since October 2020, and almost doubled in value in a year, to $9.3 billion. Investor refinancing rose 8.3 per cent to $5.9 billion in July (in seasonally adjusted terms), according to the ABS.
When asked what interest rate would spur them into refinancing roughly a quarter of respondents suggested they would consider refinancing their loan for an interest rate differential of 0.5 percentage points.
Another 16 per cent said they would consider refinancing if their rate went down by one percentage point. Less than 8 per cent said they would refinance their loans for a saving of 25 basis points or less.
The findings also state that the percentage of investors with a cash-flow deficit has remained the same as last year, with roughly 14 per cent saying that they have more money going out than coming in at the time.
Almost three-quarters of investors use brokers
The 2021 PIPA Annual Property Investor Sentiment Survey revealed that the vast majority (72 per cent) of respondents secured their last investment loan through a broker, a slight increase on last year’s figure of 71 per cent.
The same proportion of investors (17 per cent) secured their loan directly via a bank, with 4 per cent using a non-bank lender.
Only 2 per cent of investors said they hadn’t taken out a loan for their property purchases.
Additionally, 72 per cent of respondents stated that they intended to use a broker to finance their next investment loan.
While this figure is almost three-quarters of the respondents, it represents an 8 per cent decrease compared to the 2020 PIPA Annual Property Investor Sentiment Survey. However, investors continue to use and value the services of specialised professionals, PIPA noted.
More than half had sought property investment advice from qualified property investment advisers (QPIAs), with mortgage brokers coming in second place, at 46 per cent.
Buyer’s agents (45 per cent) and accountants (44 per cent) were also commonly sought after for help.
Overall, more than 80 per cent of all investors said they believed that more education is needed around the risks and benefits of investing in property.
In addition to these findings, the survey asked investors about their investment plans, and found that almost 60 per cent of investors believe Queensland is the best state to invest in.
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