Every week I read various publications to keep an eye on what is happening across the industry and recently an article caught my attention because the data showed the number of property investment loans in Australia has grown by 37% over the past four years, compared to just 4% for owner-occupied loans over the same period.
These stats were higher than I thought. I knew that property investment loans were exceeding owner-occupier loans but I wasn’t aware it was by such a big margin. Why are more people taking out a property investment loan? That is a very good question.
Firstly, the growth in investment loans has come predominantly from the 35 to 64 age group. I think people are becoming savvier and realising they need to start planning for their retirement and taking out a loan for investment property gives them a good opportunity to do so.
Secondly, there is an increase in the number of people in the 50 to 64 age group who now hold an investment property (up 3% compared to four years ago) and again I think this could be influenced by retirement planning, but also by the growing trend of purchasing an investment property via a self-managed super fund. Investment loans assist this age group achieve their investment property goals.
Thirdly, any uncertainty surrounding property investment is dissolving as investors become smarter and educate themselves about how to invest. They are more willing to take the plunge of receiving a loan for investment. I also think with the introduction of businesses such as Investor Assist now in the marketplace, it makes the investment process so much easier for potential investors because people can rely on someone experienced and reputable to do all the hard work for them, making it less of a burden to take out a property investment loan. Plus if the results are positive, it encourages investors to grow their portfolio resulting in a growth in investment loans.
I find these figures particularly pleasing as it shows there is strong investor confidence in the market around the country and buyers are finding plenty of investment opportunities they wish to pursue. I also don’t think this trend of investors taking out investment loans is likely to change anytime soon, particularly as government policy and the economic climate continue to influence whether people choose to invest or not.
Interest rates are still low which is positive for people taking out a property investment loan, plus negative gearing remains in place which is more good news for investors.
Plus I think older Australians will be smart to better plan for their retirement as they are currently facing the prospect of cuts to the pension plus the proposal to increase the pension age to 70.
Interestingly enough, many people have unfounded fears of the loan application process being particularly onerous for investors which is just not the case at all. Yes, there is a different set of lending criteria for investment loans compared to owner-occupied loans but with the right advice, you might be surprised to learn what you can borrow and just how easy it is to take out a loan for investment - just contact one of our Property Investment Specialists today, they're more than happy to asssit. Or download our Assist Kit to help get you started straight away.