Investors boosting mortgage market
INVESTORS are returning to the market and helping to reinvigorate the home finance market but possibly at the expense of first time buyers, says mortgage broker network 1300HomeLoan.
1300HomeLoan managing director John Kolenda said the ABS housing finance figures for March, 2013, recorded a 5.2 per cent rise despite official interest rates being on hold for the first quarter of the year.
Mr Kolenda said an increase in investment home loan commitments was a major factor in the better than expected monthly increase.
"With returns on cash continuing to drop, we are seeing investors returning to the property market looking for better yields," he said.
"This is a welcome development but they are coming in at the low to middle bracket and of course the downside is that they compete with first home buyers.
"Even though interest rates are at historical lows, first time buyers are still struggling to get into the market.
"While there have been increased incentives on offer around the country for first time buyers to purchase new homes, it hasn't been enough to significantly boost activity in that sector."
Mr Kolenda said the domestic economy has been subdued by lack of confidence and cost of living considerations such as rapidly rising utilities prices, food prices and even insurance.
He said the Reserve Bank of Australia had no choice but to lower its cash rate by 25 basis points to a record low of 2.75% last week.
"Most lenders have passed on that cut and the ANZ went further by lowering its standard variable rate by 27 basis points," Mr Kolenda said.
"It will be no surprise to see banks lower rates even independently of the RBA as they seek to boost market share."