Property investors continue to pile into mortgage market

The Australian mortgage market held firm in May, despite the Reserve Bank of Australia (RBA) commencing its rate tightening cycle with its initial 0.25% hike.

According to the Australian Bureau of Statistics (ABS), the total value of new mortgage commitments rose a seasonally adjusted 1.7% in May 2022, but was down 0.4% year-on-year:

Australian new mortgages

Owner-occupier commitments rose 2.1% in May, whereas investor commitments rose 0.9%.

The next chart shows divergence across both categories. Investor mortgage commitments grew by 23.7% in the year to May, versus a 9.7% fall in annual owner-occupier mortgage commitments:

Annual new mortgage growth

The recent surge in investor mortgage demand continues to crowd-out first home buyers (FHBs). Although FHB mortgages rebounded 3.4% in May they were down 26.5% year-on-year. FHB’s mortgage share has also fallen to 15.4% – well below the pandemic peak – as the investor share has surged:

Investor versus first home buyer mortgages Investor versus first home buyer mortgage share

Given the RBA is tipped to hike interest rates aggressively over the remainder of 2022, expect mortgage demand to stall as buyers wait on the sidelines.

Unconventional Economist
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  1. BackwardArseCountryMEMBER

    Could this be a factor of people getting ready for the potential fall and getting pre-approved before new lending restrictions kick in once the arse fall out of everything???

  2. DingwallMEMBER

    Real estate spruikers will still be advising “its always a great time to buy”….. the message never changes….

  3. Camden HavenMEMBER

    The prospect of taking the shirts from the backs of renting families by gouging ever higher rents is just too attractive to pass by.

  4. With so many renters experienced the big jump of rent. Many chose to get in the property market now before the interest rates getting higher with the reduced borrowing power in the nearest future. They might think it is a right move, good luck to them.

  5. kannigetMEMBER

    A Mate keeps saying ” A savvy investor is cautious when the market is bold and bold when the market is cautious”, I think he is trying to paraphrase some famous “investor” / “guru”. Even he is looking at the property market and saying run!