Investor borrowing hits highest level since 2015 while first home buyers drop out

suburban-street-in-australia

Despite sky-high prices, enthusiasm for investment properties appears to be continuing to grow, with investors taking out new loans at near-record levels in order to get into the market.

Released yesterday, the latest lending indicators from the Australian Bureau of Statistics (ABS) show that new home loan commitments taken on by investors rose by 1.1% to $9.73 billion in the month of October.

The latest figure is the largest recorded by the ABS in over six years, and it’s more than double the recent low point of $4.23 billion recorded by the Bureau towards the start of the pandemic in May 2020.

“The value of new loan commitments for investor housing has grown for 12 consecutive months, reaching $9.7b in October 2021. This was the highest level since the all-time high in April 2015,” said ABS head of finance and wealth, Katherine Keenan.

"While the value of investor loan commitments has grown 90 per cent over the past year, the number of investor loans only accounted for 33 per cent of all new loan commitments for housing in October."

New loan commitments (seasonally adjusted). Source: ABS lending indicators, October 2021

abs-new-lending-figures-dec-2021

As the above graph from the ABS shows, the amount of new loan commitments made by investors is heading in the opposite direction to owner occupiers though.

Since reaching an all-time high of $23.44 billion back in May, new lending to owner occupiers has fallen by around 15%, with the latest figure now below the $20 billion mark.

“The value of owner-occupier loan commitments fell for the fifth consecutive month, but remained 15 per cent higher compared to a year ago and 43 per cent higher than pre-COVID levels in February 2020,” said Keenan.

Part of that drop in new owner-occupier lending is represented by first home buyers who, as a group, have fallen off significantly during the year. According to the ABS, the number of new loan commitments made by first home buyers has now fallen for nine consecutive months since peaking in January.

“Falls in the number of first home buyer loan commitments were seen across most states and territories, particularly Western Australia, which fell 13.8 per cent, Queensland, which fell 6.3 per cent and New South Wales, which fell 4.3 per cent. There were small increases in Victoria of 1.9 per cent and in the Northern Territory of 6.0 per cent,” Keenan said.

New loan commitments to first home buyers (seasonally adjusted). Source: ABS lending indicators, October 2021

abs-fhb-new-loan-commitments

This sustained drop off in first-time buyers is likely, in part, a by-product of the surging price increases we’ve witnessed in property prices over the same period.

The latest figures from CoreLogic released yesterday show that, despite a relatively moderate monthly increase of 1.3%, national housing values are up 22.2% over the year - equivalent to an $126,700 increase in the median value of an Australian home.

And with two of the country's major banks predicting further price rises in 2022, it’s possible that we’ll continue to see fewer first home buyers taking out loans in the months ahead. 

RELATED: ME reveals the top 20 suburbs for Australian property investors

Considering purchasing a new investment property, or looking to refinance your existing loan?

Compare a range of loans from a variety of lenders all in the one place by using our handy investment loan comparison table, or get started right away by looking through some of the great offers in the table below.

Investment property loan comparison - last updated 23 January 2022

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure
  • Smart Home Loan
    interest rate
    comparison rate
    Initial monthly repayment
    2.99% p.a. variable
    3.01% p.a.

    A low-rate home loan that could save you thousands. No application or ongoing fees. Unlimited additional repayments. Unlimited free redraws with no minimum redraw amount, Limited time only.

    Details
  • Mozo Expert Choice Badge
    Fixed UHomeLoan
    interest rate
    comparison rate
    Initial monthly repayment
    2.14% p.a.
    fixed 1 year
    2.35% p.a.

    Lock in a great low home loan with UBank. Fast and easy online application. No monthly account fees.

    Details
  • Variable Home Loan
    interest rate
    comparison rate
    Initial monthly repayment
    2.29% p.a. variable
    2.29% p.a.

    Refinance only. Super-fast digital application process. Competitive low investment interest rate. Zero upfront fees. No on-going service fees. Free 100% offset sub account. Comes with Visa debit card and the ability to use digital wallets; Apple and Google Pay. 25% deposit required.

    Details
  • Mozo Expert Choice Badge
    Celebrate Variable Home Loan
    interest rate
    comparison rate
    Initial monthly repayment
    2.19% p.a. variable
    2.19% p.a.

    Enjoy zero fees and a speedy online application process. Free extra repayments and redraw facility. Flexible loan repayments. Minimum 20% deposit required. Winner of three Mozo's Experts Choice Awards for 2021.

    Details
  • Mozo Expert Choice Badge
    Well Balanced
    interest rate
    comparison rate
    Initial monthly repayment
    2.17% p.a. variable
    2.23% p.a.

    Zero ongoing fees and free extra repayments and redraw facility with an option for an offset account. Winner of the Offset Home Loan Expert's Choice Award for 2021.

    Details
  • Special Real Deal Home Loan
    interest rate
    comparison rate
    Initial monthly repayment
    2.49% p.a. variable
    2.53% p.a.

    Details

* 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, loan amount and term entered. 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.