The expectation that increased investor activity in the residential property market would take over as the driver of mortgage demand this year appears to be nothing more than a fond hope.
The latest figures from mortgage aggregator Australian Finance Group, released yesterday, show that demand from investors is as weak as demand from other groups of borrowers.
Loans to property investors made up 35.4 per cent of the mortgages written by AFG brokers in June, down from 36.7 per cent in May and 36.9 per cent in April.
The total number of loans written by AFG brokers fell from 6624 in May to 6159 in June and the value of those loans fell from $2.5 billion to $2.3 billion.
The market has been trending sideways since October last year, when interest rates started to rise.
Those trends may be reinforced if interest rates increase, as they may irrespective of changes in the official rate.
Ram Kangatharan, chief operating officer of Bank of Queensland, told
Dow Jones yesterday that, "On the wholesale side, things are getting tougher …. All of the banks are starting to feel the pinch in terms of deposit margins.
"As the pressure continues on the majors, they would want to move outside the RBA rates. I think what's holding them back is election year," Kangatharan said.