Sunday, September 1, 2013

Investors push back into housing


Investors are being attracted by record-low rates.

Mortgage broker AFG says nearly half of its mortgages written in NSW last month were for property investors, in yet another sign that investment in property is heating up in the country's largest state.

Investors accounted for 49.5 per cent of its mortgages, up from 45.9 per cent in July and 44.7 per cent in August last year, the broker said.

"This is the highest level of investor activity the company has ever recorded for any state," AFG said today.


While investors are being attracted by low rates, first-home buyers have shunned the market amid record high price and as incentives have been cut.

AFG has roughly 10 per cent of the mortgage broker market, and its monthly index offers a clue as to what the official figures may show in about six months time.

Westpac, originally known as the Bank of NSW, has the largest exposure to the state.

AFG's general manager of sales and operations, Mark Hewitt, said the broker had been tracking activity through its internal figures for about 15 years.

The broker's numbers are latest sign that investors – attracted by very low interest rates – are playing a key role driving the recovery in the housing market.

Across the economy, ABS figures show loans to investors accounted for 35 per cent of new housing finance commitments in June, up from 33.5 per cent a year earlier. First home buyers made up just 15.1 per cent of housing commitments in June.

Stronger growth in lending to investors was also been confirmed by official figures from the Reserve Bank last week.

These showed credit to housing investors growing at an annual pace of 5.8 per cent, the fastest in two years, compared with 4.1 per cent annual growth in owner occupied housing.

JPMorgan economist Tom Kennedy said: "The trend clearly has been towards more investment activity rather than owner-occupied activity."
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