Interest-only home loans falling in value for investors

By Sasha Karen
Interest fall

Demand for home loans rose in May, although investors are seeing a fall in home loan value.

According to the latest Housing Finance data, 54,061 total loans were approved in May, an increase of one per cent from April.

The value of all dwelling commitments also rose 1.3 per cent to $33.03 billion in May.

“This bounce back in home loan demand is a positive sign for the property market and the broader economy,” Mortgage Choice CEO John Flavell said.

“That said, this bounce back in home loan demand is hardly surprising. The fact is, the property market remains relatively buoyant, with historically low interest rates keeping the cost of borrowing low and heat in the market.”

However, a 1.4 per cent fall in home loan values was recorded for investment loans, while there was a 2.9 per cent rise in home loan approvals for owner-occupied housing.

“Of course, I am not at all surprised by this. Over the past few months, Australia’s banks have been significantly tweaking their policy and pricing in relation to investment lending,” Mr Flavell said.

“In particular, we have seen some significant changes in the area of interest-only loans. Some lenders have raised their pricing, while others have adjusted their policy.

“As a result, we have seen some potential property investors put their purchase plans on the backburner indefinitely.”

Mr Flavell predicts home loan demand to maintain its strong bounce back, particularly for owner-occupiers.

“Interest rates are still low and will remain so for some time to come. In addition, some of the states have introduced new first home buyer incentives, which should also help to keep some heat in the market,” he said.

“That said, the Australian property market is very complex at the moment. So, anyone thinking of buying or refinancing should speak to their mortgage broker to ensure they find the right product for their needs.”

Interest-only home loans falling in value for investors
SPI logo
Thank you.

Your enquiry has been sent to a local Aussie Mortgage Broker.

We will be in contact with you shortly.

error occurred.
Unfortunately Aussie cannot attend to your home loan related enquiry at this stage as you must be a citizen or permanent resident.
Do you need help finding the right loan for your investment?
What Aussie do for you:
  • Give expert mortgage advice to help you find great investment loan deals
  • Help you maximise return by lowering financing costs
  • Save you time and effort by helping with the paperwork
First name
Last name
Mobile Number
Are you an Australian Resident?
promoted stories

Top Suburbs

Highest annual price growth - click a suburb below to view full profile data:
BLUE BAY 49.18%