Mortgages for investment properties are a key component of the Australian mortgage market. In 2003 lending commitments for investment properties amounted to almost 40 per cent of total lending commitments and more than 20 per cent of adults own investment property. Why has this market performed so well? How will it perform going forward? This briefing provides the answers.
Scope
Covers the investment property mortgage market in Australia with comparison to the buy-to-let mortgage market in the UK
Includes an estimate of the size of the investment property mortgage market and a forecast of lending commitments to 2008
Based on in-depth interviews with mortgage executives
Highlights
Given the factors pulling in its favor it is no surprise that the Australian investment property mortgage market has grown as rapidly as it has done. What is perhaps most remarkable, however, is just how significant the investment property mortgage market is in Australia.
Having hit a peak in August 2003 of 40.0 per cent of total lending commitments, in September 2004 lending commitments for investment properties amounted to only 34.3 per cent. This is the lowest percentage contribution to total lending commitments since February 2002.
In September 2004 Commonwealth Bank had a higher value of investment property loans outstanding than any other lender in Australia, amounting to AUS$30.8 billion. The next nearest competitors were National Australia Bank and Westpac, some way behind with loans outstanding of AUS$32.0 billion and AUS$28.5 billion respectively.
Reasons to Purchase
Identify the factors that have driven the growth of the investment property mortgage market over the last few years
Examine evidence suggesting that the investment property mortgage market has slowed in 2004
Identify lenders with the greatest exposure to this area of the mortgage market
