Investors Turn to Brokers

The demand for mortgage broker services has continued to rise over the last couple of years with now well over 50% of residential mortgages being written through the third-party channel. That number is even higher when it comes to property investors, due to the ongoing regulatory changes and tightening of credit regarding investor lending.

The 2017 PIPA Annual Investor Sentiment Survey found that of the 742 investors surveyed, 73% secured their last investment loan through a broker and 83% of property investors said that they intend to secure their next investment loan through a broker. Both of these statistics are up on the previous year’s survey.

The survey also looks at the speculations around negative gearing. It appears that these speculations are somewhat just that; noise. 52% of property investors are currently negatively geared, with more than half of these investors expecting to be positively geared in the next five years. Only a small percentage of investors are now attracted to negative gearing for the tax concessions and it is not generally seen as a long-term investment strategy.

The other factor driving investors to use mortgage broking professionals is the higher interest rates in investment lending, and even higher rates on interest only investment lending that has been driven by the APRA introduced limits on interest only lending. Investors are now moving towards paying down investment loans on a principal and interest basis rather than the traditional interest only repayments. This is based on the lower interest rates on principal and interest repayments.

Mortgage brokers can assist in removing the noise and ambiguity from the market by making sure that the investor’s goals are aligned to the product and repayment type that suits their long term real estate investment strategy.

If you would like further information around investment strategies or interest rates, speak to your financial adviser.