Industry News, Sept 2017

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The Advisor - by James Mitchell 07:50 AM, 28 Sep 2017

Demand for mortgage broker services has skyrocketed in the last 12 months, with over 80 per cent of property investors eager to secure funding through a third-party channel.

The 2017 PIPA Annual Investor Sentiment Survey, released this week, found that property investors remain resilient in the face of ongoing regulatory change and tighter credit. Mortgage brokers are the winners in this story, with more and more investors turning to a broker for their finance needs.

PIPA's survey of 742 investors found that 83 per cent of property investors intend to finance their next loan through a broker, up from 71 per cent last year. Meanwhile, over 73 per cent of investors said that they had secured their last investment loan through a broker, up from 65 per cent.

Since the release of PIPA's last survey in 2016, APRA has introduced limits on interest-only lending, which has typically been the preferred product choice for property investors.

With lenders now charging higher interest rates for interest-only loans, 29 per cent of investors surveyed by PIPA have either have switched or intend to switch to principal and interest repayments, while 36 per cent have no plans to switch and 28 per cent are not sure.

Interestingly, the survey also shows that only half (52 per cent) of property investors are currently negatively geared, with a majority (62 per cent) of them expecting to become positively geared within five years.

PIPA chair Ben Kingsley said that the survey results confirm that investors remain committed to property as a favourable investment option over the long term.

"It has been an eventful time for residential property investors since we published our last survey in 2016,” Mr Kingsley said. "Similar to last year, most property investors are looking past short-term challenges and are remaining focused on the long-term wealth benefits that are available from residential real estate. The survey also affirms that a lot of the speculation about negative gearing misses the mark. Most investors understand that negative gearing is only a short-term cash flow position, not a property investment strategy. And only a very small minority are attracted to real estate for these tax concessions."