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Brokers have voiced concern about “micromanagement” and “artificial intervention” after regulators warned that new mortgage rules are coming.
The Reserve Bank of Australia said last week that new lending rules were likely to be announced later this year, partly because an investor boom has distorted the property market.
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Australian Lending & Investment Centre managing director Jason Back said a range of factors have been driving the rise in investor activity, including low interest rates, overseas demand and a growing acceptance for renting over buying.
However, Mr Back warned that “artificial intervention” by regulators would not produce the result they wanted.
“Removal of such factors of negative gearing will lead to investors passing on the cost to tenants and increasing rent,” he told The Adviser.
“The market determines the value of the property, and we already have checks and balances in place for the banks such as valuers and LVRs and servicing calculations to protect both the funders and the borrowers.”
House & Home Loans owner Rael Bricker said his firm had experienced a significant increase in investor activity in the past six months.
He said he was sceptical that regulators would be able to “micromanage” the property market into a balanced state by introducing new regulation.
Mr Bricker also said the rise in investor activity had actually helped owner-occupiers as it had driven up rents and therefore made buying a cheaper option in an increasing number of suburbs.
AFG’s general manager of sales and operations, Mark Hewitt, said foreign buyers were mainly responsible for the investor boom.
Mr Hewitt said the Reserve Bank’s decision to go public with its concerns was probably a calculated strategy to spark debate and possibly generate a change in behaviour.
“Normally the way the Reserve Bank and the regulators operate is they like to see the industry self-regulate before they come in over the top,” he told The Adviser.
“No doubt in private they’re having discussions with lenders and other industry bodies.”
Mr Hewitt said he was concerned about the impact that investor activity was having on first home buyers, although he added that he was unsure how the authorities should respond.
[Related: Debate continues about possible changes to lending rules]
