Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

'Huge fan of your work. Very impressive!' - Scott Pape, The Barefoot Investor, Australia's #1 bestseller.

'Must-read, must-follow, one of the finest analysts in Australia' - Stephen Koukoulas, ex-Senior Economics Adviser to Prime Minister Gillard.

'One of Australia's brightest financial minds, must-follow for accurate & in-depth analysis' - David Scutt, Business Insider.

'I've been investing 40 years yet still learn new concepts from Pete; one of the finest young commentators' - Michael Yardney, Amazon #1 bestseller.

'The most knowledgeable person on Aussie real estate - loads of good data & charts...most comprehensive analyst I follow in Oz' - Jonathan Tepper, Variant Perception, 2 x NYT bestseller.

Wednesday, 6 May 2015

21 year high for Sydney and Melbourne investor lending

Investor lending surges

Australian Finance Group (AFG) released its May 2015 mortgage index figures today which showed investor lending in Sydney and Melbourne rising to a 21 year high.

The proportion of loans written nationally to investors has surged to 43 per cent from 39 per cent in April 2014.

And with another rate cut set to take fixed rate mortgages down to incredibly cheap levels - some at below 4 per cent - the investor surge is likely to continue.

April seasonally softer

AFG, which accounts for around 10 per cent of the mortgage market, processed 9,661 mortgages in April, a 13 per cent increase on the prior year figure.

Mortgage volumes are typically seasonally weaker in April than in March.

However, over the past two years there has been a considerable run-up in the number of mortgages written.

AFG processed an aggregate of $4,380 million of mortgages in April, an increase of $708 million or 19 per cent on the April 2014 dollar value.

State versus state 

The strong results have largely been driven by a huge splurge in investor activity in Sydney and Melbourne.

Over the past two years mortgage volumes in dollar value  terms have boomed by 70 per cent in New South Wales and 50 per cent in Victoria.

Queensland and South Australia have also seen mortgage volumes increase by 24 per cent and 28 per cent respectively.

Mortgage activity in Western Australia has been waning as the Perth market moves into its downturn phase.

Investors lead market

A crunching 52.8 per cent of mortgages processed by AFG in New South Wales were to investors in April, very close to the record high levels reported by the mortgage aggregator in January 2014.

40.9 per cent of loans were also to investors in Victoria, while the investor loan share also jumped to 36.7 per cent in Queensland in April 2015.

The wrap

These figures very much tally with what we have seen happening on the ground as well as the most recent data from APRA which has also suggested that investor lending has continued to remain imperiously strong.

Noted Mark Hewitt, general manager of sales and operations at AFG:

"Investor borrowing in both Sydney and Melbourne is now at the highest level we have recorded in 21 years".

A further interest rate cut delivered yesterday will do little to dampen investor enthusiasm.