What’s trending in home loans?

Have you been wondering about trends in the home loan market, and when to take the plunge? The data you need is here to help.

The Australian Prudential Regulation Authority (APRA) have released their ADI Property Exposures report for June 2014 – this is basically a snapshot of all the lending that has occurred from banks or other institutions, detailing what types of loans people have, and how much has gone to investment or owner-occupied property purchases.

The figures for people taking out investment home loans have hit record highs, with 37.9 per cent of all new loans in the last year going to investors, a 14.4 per cent increase on 2013. This is likely due to continuing low interest rates bolstering confidence in purchasing property.

More people are taking out loans with a higher loan-to-value ratio, meaning they are putting in bigger deposits and getting more control of their mortgage, reducing borrowing risks. The number of people taking out loans through third parties leaped to the highest percentage (43 per cent) since mid-2008.

But what does this mean for you?

The large increase in lending to investors suggests that banks and other financial institutions are feeling good about Australians’ ability to make good investments and find good returns, enabling them to pay off their mortgages faster than last year.

If you have been interested in taking out a mortgage for property, now could be a good time to do so. While interest rates remain low, interest-only loans come at little cost to investors who are buying a house with the intention of selling it in the short-term. Strong property growth in Sydney and Melbourne means you can benefit from a property that increases in value.

Unsure about making an investment? Mortgage brokers can break down the data even further for you, giving you a clear idea of what sort of loan works best in the current market.