An increasing number of property investors are securing finance through a mortgage broker, with 83% of investors intending to do so in the next 12 months.
The third annual national Property Investor Sentiment Survey from Property Investment Professionals of Australia shows 73% of investors used a broker to secure their most recent loan demonstrating an 8% jump when compared to just two years previous.
PIPA says this is because property investors are increasingly looking to secure a better deal as 68% believe it is unfair that they have to pay higher interest rates than owner occupiers.
PIPA chair Ben Kingsley said this shows sophisticated investors are prepared to use professionals to help grow their portfolios.
“The restrictive lending environment for investors across the nation may have removed some of the speculation out of the market, but is also preventing some sophisticated investors from investing in their financial futures as well as adding to the supply of rental properties,” Kingsley said.
However, despite changes in lending policies over the past two years, 38% of investors say they had no difficulty refinancing, compared to 22% who say they are experiencing difficulties.
Further, 30% of investors have either switched or intend to switch to principal and interest repayments given lenders are charging higher interest rates on interest-only loans. Thirty-six per cent have no intention to switch.
Overall, the majority of investors remain bullish on residential real estate, with 70% believing it is a good time to invest. Only 14% have put plans to invest on hold in the wake of proposals to ban negative gearing and reduce capital gains tax exemptions.
“The optimism is consistent with the fact that investors focus on the long-term wealth benefits of real estate. Long-term capital growth and rental growth are seen as the two biggest reasons for investing in property by those surveyed,” the report reads.
Concerns around a property bubble have led to 15% of investors shying away from plans, however the concept of ‘rentvesting’ has grown in popularity with 62% of investors saying they would consider renting in a location that suits their lifestyle and investing in another, less expensive location.
Finally more than 90% of investors are unhappy with the lack of regulation applied to those providing advice around property investment, believing that any provider of advice should be required to have formal training and be regulated/licensed.
Jamie Williamson, Financial Standard, 26 October 2017