It's been the lowest level for property lending in the last six years for the final quarter of 2015 according to ASX-listed mortgage broker Australian Finance Group (AFG), Financial Review reports.
The rating is attributed to tougher bank lending criteria, increase in investor interest rates and the cooling market.
AFG mortgage brokers recorded a total of 29,000 homes loans worth $13.8 billion in the December quarter, to which 31 per cent is of investor loans; that's a 2-per cent drop from the 33 per cent recorded in the September quarter and the peak level of 40 per cent in the March and June 2015 quarters.
Before this, October 2009 was the previous low recorded for investor participation at 31.3 per cent of the portion of loans settled by AFG brokers.
According to Mark Hewitt of AFG, he expects investor participation to stabilize at 30 or 31 per cent in 2016 as compared to 2015's 36 per cent with most of APRA-enforced lending changes - introduced in the early part of 2015 - had faded.
"Most lenders would now be operating within APRA's 10 per cent investor lending growth cap. Otherwise, there would be more changes coming through, but we haven't seen any for the past two months," he said.
Australian Bureau of Statistics and the Reserve Bank in their official yet less up to date lending figures also see a slowdown in investor lending.
Recent ABS October figures also showed a drop in investor loans by 6.1 per cent with the $11.5 billion lending record as the weakest aggregate monthly figure since June 2014.
According to AFG, home loan refinancing and upgrading filled the investor vacuum, increasing to 38 per cent from 36 per cent, and 34 per cent to 35 per cent over the quarter, respectively.
However, first home buyers loan dropped from 9 per cent to 7 per cent.
With the falling rents and better deals, first home buyers are encouraged to stay renting, says Mr. Hewitt.
The number of those wanting to fix their loans also rose, based on the AFG figures.
