Bullish investors 'unsure' of P&I, refinancing challenges

The mettle of Australia’s property obsession has withstood a barrage of forces that are failing to curb the enthusiasm of bullish investors across the nation.

According to the 2017 PIPA Annual Investor Sentiment Survey, 70 per cent of investors believe that now is a good time to invest in residential property.

Moreover, 61 per cent of investors are looking to purchase a property in the next six to 12 months (up slightly from 58 per cent last year) and 47 per cent purchased a property over the past year, up from 43 per cent in the prior survey.

However, more investors than last year (43 per cent in 2017 versus 32 per cent in 2016) said that changes to investor lending policies have impacted their ability to secure finance for an investment property.

PIPA chair Ben Kingsley said that there are a few worrying figures that reflect a level of uncertainty among investors when it comes to finance.

“We did see some evidence of lending fatigue in terms of investors that have been forced to stop borrowing,” Mr Kingsley told Mortgage Business.

While the majority of investors with interest-only (IO) loans said that they won’t struggle to meet the new principal and interest (P&I) repayments once their current IO period expired, 12 per cent said that they would.

“I was a little bit worried that 12 per cent said if their loans switched to P&I they would struggle,” Mr Kingsley said.

“What was even more interesting to me was that 20 per cent were unsure. I would like to think that many investors should know what is important to them.”

Investors were also asked whether they had experienced difficulty refinancing, given the challenging lending environment. Only 38 per cent reported no difficulty refinancing, 28 per cent weren’t sure and 22 per cent said that they would have difficulty refinancing.

Mr Kingsley noted that the high number of "unsure" borrowers was a concern.

Meanwhile, PIPA’s survey results show that investors are not bothered by the proposals and lobbying efforts of the Labor and Greens parties to ban negative gearing and reduce capital gains tax exemptions or changes to investment deduction allowances.

Only 14 per cent of investors have put investment plans on hold due to these proposals. Similarly, only 15 per cent of investors have put their plans on hold due to concerns around a property price "bubble".

[Related: Debt control: Too little, too late?]

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