Falling Investor Loan Rates Could Spell Bad Tidings For Flippers

But it also outlines good news for homeowners.

In October 2015, the number of Australian mortgages approved for “investment property” decreased by 6.1%, while the number of mortgages for owner occupied houses increased by .4%.

This figures are causing some to speculate that the housing market is cooling off, due to a decrease in real estate investor activity.

There has been some cooling in the housing market, but it’s not as drastic as some would have us believe. The overall number of home loans have decreased, but only by .5%, with the overall worth of the housing market falling by 2%.

Rather than being a cause for alarm, it’s more like a natural byproduct of extremely high investor activity in the real estate market, which peaked in April of 2015, and fell to a modest 15% in three short months.

Instead of being a sign of an unhealthy economy, these declining numbers are more likely a byproduct of the strict mortgage regulations being pursued by the Reserve Bank and the Australian Prudential Regulation Authority (APRA). The APRA introduced these rules at the end of 2014, to help reduce the amount of risky loans on the market.

The increased mortgage rates, which rose to a new high in November 2015, are another reason for the decline in investment mortgage rates.

Financial analysts, such as RBC Capital Markets fixed income and currency strategist Michael Turner, are predicting the housing market could stay cool throughout 2017, due to sluggish population growth and a massive supply pipeline. According to Turner, “”The new price incentive for mortgage holders to classify loans as owner occupier, not investor, are muddying the water.”

What this means for mortgages on the Sunshine Coast remains to be seen.

Looking for your first house? Let our mortgage brokers on the Sunshine Coast help you find what you’re looking for! A great mortgage broker can read between the lines, to help you better assess how the market’s actually performing.