One in five first timers set for investment entry onto property ladder: Mortgage Choice

One in five first timers set for investment entry onto property ladder: Mortgage Choice
Jonathan ChancellorFebruary 26, 2015

Mortgage Choice has noticed a marked alternate trend of first time investor buying by the traditional first home buyer. 

"More and more are buying investments as their first time buy," Michael Russell, the Mortgage Choice chief executive said.

Their recent survey showed there were 21% of its first time buyers borrowing for an investment property rather than a home to live in.

Last year, Mortgage Choice surveyed one thousand first home buyers (FHBs) and found 21% set to buy an investment property as their first property purchase.

“This is significantly up on what that number would have been five years ago,” Russell said.

It was such a new area of activity, with little historical data, that he added that like for like "we can't make comparisons".

"But there is no way it was 21% in the past.

"There has been a significant paradigm shift."

"They want to live where they want to live not where they can afford to buy.

"My generation bought out on the fringe and commuted in," he said.

"There are valid reasons why we are seeing this paradigm shift," said Russell.

Figures supplied to Property Observer show the majority of first home buyers purchasing owner-occupied properties are taking out loans with a 90% or 95% LVR, while first time investors are largely taking out loans with a 90% LVR.

The Australian Bureau of Statistics recently advised errors in its first home buyer statistics which were based on government grant recipient numbers rather than the entire market.

“We knew the data we were providing to the banks was not allowing the ABS to identify the true volume of homeowners buying established property,” said Russell.

“The ABS has now recognised this.

“We have the RBA and APRA looking at investor lending closely. We are encouraging the media and encouraging the regulators to look through the numbers because we are not comparing apples to apples."

Mortgage Choice notched up a record number of loan approvals with $6.9 billion worth of home loan approvals in the six months to December 31, up from $6.2 billion a year earlier.

 

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

Editor's Picks

City Beat January 2025: Sydney property market cooldown slows as new apartment pipeline ramps up
26 Vista Street, Surfers Paradise apartment development, hits 70 per cent sold
Latent Defects Insurance 101: What is the Technical Inspection Service (TIS) Program
City Beat January 2025: Gold Coast property values continue to grow as off the plan enquiries hit near 12-month high
Live parkside in Melbourne for under $500,000