Invest
‘Foolish’ loan choices flagged for investors in 2019
Investors have been warned to be cautious in adopting interest-only loans, despite APRA recently lifting its cap on lenders, with one expert labeling the uptake of such loans “foolish” in the current market.
‘Foolish’ loan choices flagged for investors in 2019
Investors have been warned to be cautious in adopting interest-only loans, despite APRA recently lifting its cap on lenders, with one expert labeling the uptake of such loans “foolish” in the current market.
Robert Muller, managing director of BIS Oxford Economics and property expert, explained to Nest Egg that although APRA’s lifting of the 30 per cent cap placed on lenders offering interest-only loans has been welcomed by many in the industry, investors should be careful of diving into such loans head first in the current market.
“Would I borrow at the moment and take an interest-only loan? I wouldn’t call it a wise financial decision,” he said.
“It’s all good and well in a period of strong capital growth but [at the moment], you’re gaining no equity in the property, basically, in fact you’ve got negative equity in a current falling market.”
He said while APRA’s changes, which came into effect on January 1, does offer the opportunity for demand in housing loans to rise, this will not occur for some months as savvy investors will fail to be enticed until markets begin to recover.
“It’s not these side issues that will be a critical thing, it will be a turn-around in property prices in terms of the fundamentals of the market turning from negative to flat,” he said.
“As long as prices keep falling, investors are going to remain out of the market in the numbers they were in the past, so we’re not going to see a return to higher demand.
“Could we see a reduction in the rate of decline in demand for housing loans? Yes, that could happen over time if the signs were there that price declines are reducing,” Mr Muller said.
“I don’t think we will see that in the next six months. Could we see that in the second half of this year? Yes. And if that was to occur, then that might encourage more people.”
APRA’s announcement
Towards the end of last year, Australian Prudential Regulatory Authority (APRA) announced it would lift the 30 per cent cap on the number of new interest-only mortgages it had placed on lenders since March 2017.
The change came into effect on 1 January this year, on the requirement that lenders offered APRA assurances that they had strengthened their lending practices and were offering loans prudently.
APRA has previously said that most lenders, including the four major banks, have met such criteria.
Areas of growth in 2019
Mr Muller did identify a few key areas were small growth is predicted to occur over the coming year.
He said Brisbane’s detached housing market, Adelaide and Hobart may all see some improvement in growth rate, with regional areas such as Newcastle and Queensland’s Sunshine Coast and Gold Coast worth keeping an eye on.
RELATED ARTICLES
Property
2026 property expansion? Why disciplined investors will wait — and where to play offence
A growing chorus of market practitioners is urging investors to pause portfolio expansion in 2026 as returns compress and policy settings tighten. The headline risk is less about price crashes and ...Read more
Property
Cost, red tape and capital: why Australia’s housing pipeline is shrinking — and how to rebuild it
Australia’s housing pipeline is being choked by a toxic mix of escalating input costs, regulatory drag and tighter finance. The result: mid-market projects stall while luxury builds proceed, pushing ...Read more
Property
Start 2026 strong: Turn property advice into a data-driven advantage
In 2026, property professionals who industrialise goal-setting and risk management with data and AI will capture outsized client value. The playbook is shifting from intuitive advice to measurable, ...Read more
Property
Solar for renters isn’t just social policy — it’s a new operating model for residential property
Queensland’s Supercharged Solar for Renters program, backed by the REIQ, reframes the ‘split incentive’ that has stymied energy upgrades in rentals. With rebates of up to $3,500 per property and joint ...Read more
Property
Holiday towns as assets, not postcards: How to invest where the beach meets the balance sheet
Summer seduces capital to the coast, but the smart money treats holiday towns like operating businesses, not lifestyle trophies. Demand is seasonal, regulation is variable, and returns depend on ...Read more
Property
First Home Supply: a $10b bet on 100,000 keys — and a reshaping of Australia’s build-to-sell pipeline
Can $10 billion translate into 100,000 front doors for first-time buyers — without overheating costs or stalling on approvals? The new First Home Supply program signals a pivot from demand-side ...Read more
Property
Navigating the crunch: A 2025 case study of Australia’s housing market and the operators who outperformed
Australia’s 2025 property market was defined by a stubborn supply squeeze and cost-of-living pressure—tempered by rate cuts and targeted incentives. Yet a cohort of developers, lenders and agencies ...Read more
Property
Australia’s mortgage rebound: a 19% surge that reshapes pricing, risk and distribution
New APRA figures show new home lending jumped 18.9% in the September quarter year-on-year, signalling a demand recovery despite elevated rates. The upswing intensifies a three-way contest between ...Read more
Property
2026 property expansion? Why disciplined investors will wait — and where to play offence
A growing chorus of market practitioners is urging investors to pause portfolio expansion in 2026 as returns compress and policy settings tighten. The headline risk is less about price crashes and ...Read more
Property
Cost, red tape and capital: why Australia’s housing pipeline is shrinking — and how to rebuild it
Australia’s housing pipeline is being choked by a toxic mix of escalating input costs, regulatory drag and tighter finance. The result: mid-market projects stall while luxury builds proceed, pushing ...Read more
Property
Start 2026 strong: Turn property advice into a data-driven advantage
In 2026, property professionals who industrialise goal-setting and risk management with data and AI will capture outsized client value. The playbook is shifting from intuitive advice to measurable, ...Read more
Property
Solar for renters isn’t just social policy — it’s a new operating model for residential property
Queensland’s Supercharged Solar for Renters program, backed by the REIQ, reframes the ‘split incentive’ that has stymied energy upgrades in rentals. With rebates of up to $3,500 per property and joint ...Read more
Property
Holiday towns as assets, not postcards: How to invest where the beach meets the balance sheet
Summer seduces capital to the coast, but the smart money treats holiday towns like operating businesses, not lifestyle trophies. Demand is seasonal, regulation is variable, and returns depend on ...Read more
Property
First Home Supply: a $10b bet on 100,000 keys — and a reshaping of Australia’s build-to-sell pipeline
Can $10 billion translate into 100,000 front doors for first-time buyers — without overheating costs or stalling on approvals? The new First Home Supply program signals a pivot from demand-side ...Read more
Property
Navigating the crunch: A 2025 case study of Australia’s housing market and the operators who outperformed
Australia’s 2025 property market was defined by a stubborn supply squeeze and cost-of-living pressure—tempered by rate cuts and targeted incentives. Yet a cohort of developers, lenders and agencies ...Read more
Property
Australia’s mortgage rebound: a 19% surge that reshapes pricing, risk and distribution
New APRA figures show new home lending jumped 18.9% in the September quarter year-on-year, signalling a demand recovery despite elevated rates. The upswing intensifies a three-way contest between ...Read more
