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.

Property
First home buyers brace for strengthening headwinds
While Australian first home buyers dominated the market in 2020, increasing their market share by 50.4 per cent in the past year, they're likely to face strengthening headwinds as prices soar. ...Read more

Property
Australia’s most popular rental suburbs revealed
Tenants should brace themselves for rental price hikes as tightening vacancy rates continue across the country, new research has revealed. ...Read more

Property
Australian home values rise at fastest rate in 17 years
Overall, Australian home values surged 2.1 per cent higher in February, the largest month-on-month change in CoreLogic’s national home value index since August 2003. ...Read more

Property
Housing finance records continue to tumble
Australian housing loan commitment has reached another record high in January, rising by 10.5 per cent in the last month alone, official figures show. ...Read more

Property
Detailed forecast: How will the capital cities perform in 2021?
With most of the property market finding its footing by the end of 2020, after the COVID-induced disruption, experts have grown optimistic about the future of real estate in a post-pandemic world. ...Read more

Property
‘Allowing super to be used for deposit will jack up house prices’
Capital city prices could soar if the backbenchers’ continued push to enable first home buyers to access their super to fund their home deposit is given the green light, a super lobby group has said...Read more

Property
Poor wage growth could impede home price growth
With wages growth at record-low levels, a property expert has warned that continuing low and flat wages could impede home price growth. ...Read more

Property
Negotiating a lower interest rate on your property loan
The banks are customer hungry, meaning they’re willing to offer increased discounts to new customers and apply these discounts to existing customer loans, a mortgage broker has said. ...Read more

Property
First home buyers brace for strengthening headwinds
While Australian first home buyers dominated the market in 2020, increasing their market share by 50.4 per cent in the past year, they're likely to face strengthening headwinds as prices soar. ...Read more

Property
Australia’s most popular rental suburbs revealed
Tenants should brace themselves for rental price hikes as tightening vacancy rates continue across the country, new research has revealed. ...Read more

Property
Australian home values rise at fastest rate in 17 years
Overall, Australian home values surged 2.1 per cent higher in February, the largest month-on-month change in CoreLogic’s national home value index since August 2003. ...Read more

Property
Housing finance records continue to tumble
Australian housing loan commitment has reached another record high in January, rising by 10.5 per cent in the last month alone, official figures show. ...Read more

Property
Detailed forecast: How will the capital cities perform in 2021?
With most of the property market finding its footing by the end of 2020, after the COVID-induced disruption, experts have grown optimistic about the future of real estate in a post-pandemic world. ...Read more

Property
‘Allowing super to be used for deposit will jack up house prices’
Capital city prices could soar if the backbenchers’ continued push to enable first home buyers to access their super to fund their home deposit is given the green light, a super lobby group has said...Read more

Property
Poor wage growth could impede home price growth
With wages growth at record-low levels, a property expert has warned that continuing low and flat wages could impede home price growth. ...Read more

Property
Negotiating a lower interest rate on your property loan
The banks are customer hungry, meaning they’re willing to offer increased discounts to new customers and apply these discounts to existing customer loans, a mortgage broker has said. ...Read more