The most recent round of bank rate hikes have pushed would-be investors over the edge, resulting in a sharp drop in investor housing commitments, according to RateCity.
ABS Housing Finance data released last week shows the value of investment housing commitments in July fell by $460 million or 3.9 per cent from the previous month, according to the seasonally adjusted figures.
The last out-of-cycle rate hikes for investors and customers paying interest-only were announced and enacted in June.
“The timing of this drop says it all,” said RateCity money editor Sally Tindall.
“In June we saw the big banks lift rates for investors. The very next month, almost half a billion dollars of investors dollars fell away.
“Today’s ABS figures confirm that investors are finally getting APRA’s message,” she said.
RateCity data shows the difference between owner-occupiers paying principal and interest and investors paying interest-only was on average 0.65, but can climb as high as 1.94 percentage points.
Note: Calculations assume 5-year interest-only period.