Does a 3-year lending high signal the return of property investors?

By Tom Watson · · 2 min read
Fact Checked
Advertiser disclosure
australian-suburban-street

For the past year attention has largely been focused on the owner occupier segment of the Australian property market - particularly on first time buyers who have proved particularly enthusiastic about entering the market.

New lending data released by the Australian Bureau of Statistics last week points to a steady re-emergence of investors though, with seasonally-adjusted investment loan commitments hitting $6.9 billion in February.

This is the highest level of new investor borrowing since February 2018 and it marks a 70% increase compared to May last year when loan commitments were at their lowest.

However, the ABS lending figures show that investors are still being dwarfed by owner occupiers when it comes to borrowing, as owner occupiers took out $21.7 billion of the $28.6 billion worth of new loan commitments made in February.

And Dr Andrew Wilson, Chief Economist at property technology company Archistar, says that the current share of investor borrowing still remains well below peak levels.

“Despite recent growth, investor lending remains subdued, accounting for just 20.25% of total home lending and remarkably still below the 20.4% market share for first home buyers,” he said.

“The average long-term residential loan market share for investors is 33.3% with the February total still 31.0% lower than the record $10.1 billion approved over April 2015 during similar strong market conditions.”

The state of investor rates

According to Dr Wilson, finance constraints are among the ‘significant barriers’ holding back investor activity at present, with one such restraint being the interest rate premium paid by investors compared to owner occupiers.

So how do home loan interest rates for investors compare?

Here are the average variable rates^ for different borrower types in the Mozo database as of April 8, 2021.

Owner occupierInvestorDifference
Principal and interest repayments3.30%3.69%39 basis points
Interest only repayments3.80%3.92%12 basis points

While these differences may look relatively small, over the long run even a minor variation in rates could have a significant impact on the total amount paid by a borrower.

For instance, using our home loan repayments calculator shows that on a mortgage of $400,000 being paid off over 25 years, the difference between a rate of 3.30% and 3.69% equates to $25,091 in extra interest.

However, it’s worth noting that - as the table below shows - the ‘rate premium’ paid by investors narrows when the lowest variable rates^ in the Mozo database for different borrower types are compared.

Owner occupierInvestorDifference
Principal and interest repayments1.99% (2.05% comparison rate*) - Reduce Home Loans Super Saver Variable2.24% (2.30% comparison rate*) - Well Home Loans Well Balanced25 basis points
Interest only repayments2.47% (2.47% comparison rate*) - FreedomLend Variable Home Loan2.49% (2.55% comparison rate*) - Well Home Loans Well Balanced2 basis points

RELATED: Hobart and Sydney markets lead the way as property values climb higher in March

Ready to make an investment move of your own? You’ll want to find a home loan to suit your needs, so get started by checking out some of the hot offers below, or head on over to our home loan comparison tables to browse even more offers from a greater range of lenders. 

^Variable interest rates are based on a loan size of $400,000 and a standard loan-to-value ratio (LVR) of 80%, accurate as of April 8, 2021.

Home loan comparisons on Mozo

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can compare more home loans here.
Last updated 27 July 2024 Important disclosures and comparison rate warning*

Promoted

  • Basic Home Loan

    • Investment
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.34 % p.a.
    Variable
    Comparison rate
    6.36 % p.a.
    Initial monthly repayment
    $3,108
    Go to site

    No annual or application fees. Competitive rate tiers based on your LVR as well as interest only and split repayment options. Fast application and turnaround process. Secure online application.

  • Neat Home Loan

    • Investor
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.24 % p.a.
    Variable
    Comparison rate
    6.26 % p.a.
    Initial monthly repayment
    $3,075
    Go to site

  • Unloan Variable

    • Investment
    • LVR <80%
    Interest rate
    6.29 % p.a.
    Variable
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,092
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Neat Home Loan

    • Investor
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.24 % p.a.
    Variable
    Comparison rate
    6.26 % p.a.
    Initial monthly repayment
    $3,075
    Go to site

  • Unloan Variable

    • Investment
    • LVR <80%
    Interest rate
    6.29 % p.a.
    Variable
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,092
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Special Real Deal Home Loan

    • LVR<80%
    • Investment
    • Principal & Interest
    Interest rate
    6.29 % p.a.
    Variable
    Comparison rate
    6.34 % p.a.
    Initial monthly repayment
    $3,092
    Go to site

    Investors enjoy no monthly or annual fees to pay. Flexibility to choose your repayment schedule (weekly, fortnightly or monthly). Make regular additional repayments and extra lump sum payments. Split your home loan into multiple loan accounts.

  • Flex Home Loan

    • Investor
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.29 % p.a.
    Variable
    Comparison rate
    6.53 % p.a.
    Initial monthly repayment
    $3,092
    Go to site

  • Flex Home Loan

    • Fixed
    • Investor
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.29 % p.a.
    Fixed 3 years
    Comparison rate
    6.53 % p.a.
    Initial monthly repayment
    $3,092
    Go to site

  • Basic Home Loan

    • Investment
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.34 % p.a.
    Variable
    Comparison rate
    6.36 % p.a.
    Initial monthly repayment
    $3,108
    Go to site

    No annual or application fees. Competitive rate tiers based on your LVR as well as interest only and split repayment options. Fast application and turnaround process. Secure online application.

  • Offset Home Loan

    • Investment
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.34 % p.a.
    Variable
    Comparison rate
    6.59 % p.a.
    Initial monthly repayment
    $3,108
    Go to site

    Up to 10 offsets. Competitive rate tiers and interest only repayment option. No application fee. Split loan option. Fast, secure online application. $248 annual fee.

  • Basic Home Loan

    • Fixed
    • Investment
    • Principal & Interest
    • LVR <70%
    Interest rate
    6.55 % p.a.
    Fixed 3 years
    Comparison rate
    6.42 % p.a.
    Initial monthly repayment
    $3,177
    Go to site

    Lock in repayments from 1 to 5 years. Competitive rate tiers depending on your LVR. No application or annual fee. Fast, secure online application.

  • Offset Home Loan

    • Fixed
    • Investment
    • Principal & Interest
    • LVR <70%
    Interest rate
    6.55 % p.a.
    Fixed 3 years
    Comparison rate
    6.65 % p.a.
    Initial monthly repayment
    $3,177
    Go to site

  • SMSF Home Loan

    • LVR <70%
    Interest rate
    6.99 % p.a.
    Variable
    Comparison rate
    7.00 % p.a.
    Initial monthly repayment
    $3,323
    Go to site

    Enjoy a competitive rate on your SMSF home loan with Loans.com.au. Available for refinancers only. No application fee and no settlement fee. No monthly, annual or ongoing fees. Unlimited extra repayments. Online access via Smart Money App. 30% deposit required.

  • SMSF Home Loan

    • LVR <80%
    Interest rate
    7.49 % p.a.
    Variable
    Comparison rate
    7.50 % p.a.
    Initial monthly repayment
    $3,493
    Go to site

    Enjoy a competitive rate on your SMSF home loan with Loans.com.au. Available for purchase and refinance. No application fee and no settlement fee. No monthly, annual or ongoing fees. Unlimited extra repayments. Online access via Smart Money App. 20% deposit required.

image of houses

Need help with refinancing?

You might have questions that need personal answers. We’ve teamed up with the mortgage brokers at Lendi to get you the answers you need, and a home loan deal you deserve.

Learn more

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

Compare home loans