#33: Investor Borrowing Surges, Mortgage Stress Rises, FHB Scheme Success, Rental Market Stabilises & Broker Market Share Record High
Christian Stevens
Helping You Build Wealth Through Property | CEO of Flint & Farmers' Finance Australia - Available 7 days 🏠
Investor Borrowing Up 49.2% Since January 2023: Rising Activity in Property Market
Property investor borrowing is approaching record levels after increasing for the 14th time in 18 months. According to the latest data from the Australian Bureau of Statistics, investors signed up for $11.708 billion in home loans in July 2024, compared to a low of $7.849 billion in January 2023.
This marks a significant increase of 49.2%. During the same period, owner-occupier borrowing has increased by 22.5%.
The surge in investor activity can be attributed to a combination of rising property prices, increasing rents, and expectations that interest rates might start to fall in early 2025, making property investments more attractive.
About 5% of Borrowers Facing Cash Flow Shortfall: Mortgage Stress Growing
Reserve Bank of Australia (RBA) governor Michele Bullock has acknowledged the financial strain on some borrowers due to higher interest rates.
While these rate hikes were necessary to slow the economy and combat inflation, they’ve put a portion of mortgage holders in a vulnerable position.
“For owner-occupiers with variable-rate loans (which is a subset of all borrowers), we estimate that around 5% are in a particularly challenging situation, where the combined total of their essential spending and scheduled mortgage repayments is more than their income—that is, they have a cash flow shortfall,” Governor Bullock said.
Although this group is small, those in it have had to make painful adjustments, including cutting back on non-essential spending, trading down to lower-quality goods, dipping into savings, or working extra hours to manage their repayments.
First Home Buyer Scheme Delivering Results: Boost for First-Time Buyers
About one in three first-home buyers who purchased a property in the 2023-24 financial year benefited from the federal government's Home Guarantee Scheme (HGS), according to a report from Housing Australia.
The HGS allows eligible first-home buyers and those who haven’t owned a home in 10 years to enter the market with a 5% deposit, without needing lender's mortgage insurance.
Eligibility for the scheme includes being an owner-occupier, with individual income capped at $125,000 and couples at $200,000. Median incomes and purchase prices for participants varied by location:
The scheme is helping more Australians achieve their homeownership goals, providing a vital stepping stone into the housing market.
Rents Remain Unchanged for Second Straight Month: Rental Market Slows
After months of booming rental increases, the national median rent has stabilised, remaining unchanged for the second consecutive month in August, according to CoreLogic.
Although rents didn’t rise, they also didn’t fall. Over the past year, rental values have grown by 7.2%, but this is the lowest annual growth rate since May 2021.
CoreLogic attributes the rental slowdown to a combination of factors:
While rental growth is slowing in almost all capital city markets, Hobart remains an exception, as it recovers from a dip in rent values seen earlier in 2023.
Brokers Originating Three-Quarters of New Home Loans: Growing Market Influence
Mortgage broker market share continues to grow, with brokers now originating 73.7% of all new home loans in the June 2024 quarter, according to data from Comparator, commissioned by the Mortgage & Finance Association of Australia. This is a significant rise from 57.0% in June 2020.
More consumers are turning to brokers over banks, recognising the value of brokers' broader product comparisons.
When you enquire about a home loan through a broker, they assess products from a range of lenders, increasing your chances of finding a better deal compared to dealing directly with a single bank.
Brokers' ability to provide diverse loan options and personalised service continues to strengthen their appeal in the competitive lending market.
Available 7 days - 0404 242 033 | christianstevens@flintgroup.au
Christian Stevens - #1 Mortgage Broker in Australia
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