Qld’s New Home Loan War: How To Move On

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Real estate investors will be the winners of a new home loan battlefield as buyer activity increases in Queensland.

Analysis by RateCity found that 22 lenders have cut their home loan interest rates for investors in the past two months. Fourteen have cut their one-year fixed maturities while 19 have cut their two-year fixed-rate mortgages.

The lowest advertised floating rate at Northern Inland Credit Union is 1.89 percent, while the BCU offers 1.87 and 1.98 percent for its one- and two-year fixed-rate mortgages, respectively.

All of these are record lows, according to the comparison website.

Real estate investors will be the winners of a new home loan battlefield as buyer activity increases in Queensland. Image: Annette Dew

The latest figures from the Australian Bureau of Statistics (ABS) show that the value of new investor home loans (excluding refinancing) in Queensland was $ 1.47 billion in April, up 152 percent from a year earlier.

Nationally, that number was $ 8.05 billion, the highest since June 2017, showing that investor activity will return as the Covid pandemic subsides.

“After a sharp retreat from the market at the beginning of Covid, investors are flocking to the real estate scene again,” said Sally Tindall, Research Director at RateCity.

“The downtime in lending to investors was short-lived at best. While investors quickly stumped at the first sign of trouble last year, record lows and price hikes of up to 19 percent in some hot spots in 2021 have pulled them back into the property game. ”

Ms. Tindall said the analysis showed nine home loans from investors were now below 2 percent, compared to none a year ago.

The lowest floating rate for investors had fallen from 2.79 percent to 1.89 percent over a 12-month period, while the lowest two-year fixed rate had fallen from 2.34 percent to 1.98 percent.

“Month after month, the value of new investor loans coming into the market is rising in the tens of millions, and banks all want to be part of the action,” she said.

RateCity spokeswoman Sally Tindall said investors should be wary of cashback deals.  Image: Delivered.

RateCity spokeswoman Sally Tindall said investors should be wary of cashback deals. Image: Delivered.

To sweeten the deal even further, some lenders are offering cashbacks of up to $ 3,000 on new loans and up to $ 4,000 for those looking to refinance.

But Mrs. Tindall warned that the money wasn’t always worth it.

“Sit down and think about whether you’re likely to be ahead of the curve with a cashback deal or better off with a low-interest loan,” she said.

“When doing the math, consider the interest rate, fees, cashback, and refinancing frequency.”

Eliza Owen, head of Australian housing research firm CoreLogic, said investors made up a “relatively small” portion of housing finance at 25.9 percent, about 10 points below the decade average.

However, Ms. Owen said the value of investor loans had grown faster than owner-occupiers in the past six months, up nearly 57 percent from a 33.5 percent increase in the latter period.

She said increased investment likely pushed house prices higher, which in turn made it harder for first-time buyers to crack the tagged.

The ABS data showed that entry-level lending across the country was $ 6.69 billion in April, down $ 132 million from the previous month, the third straight decline.

“The increased funding for the investor cohort has offset a decrease in first-time buyer activity, so … the increase in investor activity has contributed to the level of housing demand, which likely contributed to a rise in prices,” said Ms. Owen.

She said there doesn’t seem to be any major headwinds to the continued growth of the residential real estate market right now.

“Although we expect the affordability constraints to take a bit of a drag on the market,” she said.

Originally published as Qld’s New Home Loan War: How To Get Forward



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