Would higher interest rates actually help to cool heat in the investor loan market?
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Podcast transcript:
Hello. Andrew Mirams from Intuitive Finance, one of Australia's leading mortgage brokers. I was recently asked a really good question about the heat in the investor loan market. Would higher interest rates actually help in cooling things off? I'm not sure on your thoughts but my thoughts are, no they wouldn't because investors are still going to invest, if they think all of the property matrixes are going to be the same.

Let's analyse what's happening in the current investor market. We've got a growing population with people coming into Australia and they all have to live somewhere. There's a clear migration to the capital cities and so that's where investors want to invest because there's a housing need in Sydney, Melbourne, Brisbane and Perth. All the major capital cities that have job opportunities and all the right matrix for an investor.

When you talk to me about, would a higher interest rate slow that market down? No. Investors will basically do their numbers. They'll do their analysis. They will look at, if the rate is 5% or 6%. If the property matrix marries up, if they think they're buying in the right suburb, if they think all the other matters would be there. I don't think a higher interest rate will affect it. I think that the other thing that APRAM and all our other regulators are talking about is how do we cool the investor market?

I absolutely agree will our higher LVR's and those people that are really stressing themselves to get because we're in a low interest rate environment and that's not going to last forever. The reality is, for investors with good deposits that are lending into the market and that are growing the current market, then, I think, we have to continue to develop that.

There's lots of talk about negative gearing and the benefits and should we take that. If you take out negative gearing, you take out the benefits for an investor to invest in the market. If you take all the investors out of the market then where are people going to live. We're not providing new housing for people to live in and we're not providing investment housing for people to live in, then an investor will look for a return, they won't necessarily get emotion about what that return is.

We need to get the balance right. We need to look at the holistic view and Australians with their love of bricks and mortar and things like that. Will higher interest rates cool the investing market? I don't think so. I think we need to be a little bit more creative in how we look at the controls and measures that we put around those sorts of markets.

Of course, at Intuitive Finance we specialise in investors and helping them to grow their wealth through property. We'd love to talk to anyone out there that's having issues with their banks or how they grow their investor portfolios. We really strategise and put a great strategy together to grow the market base today and in the future with our borrowing capacities and things like that.

Setting up financial buffers and all the important things that I think the regulators are worried about. We take an active role in our clients and making sure those are set up properly. We'd love to help everyone out there. Of course, you can call us on (03) 9598 8544.

I look forward to speaking to you soon.