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While economists across three of the big four major banks are forecasting at least one additional hike in the official cash rate, Finni brokers Eva Loisance and Costa Arvanitopoulos said that the investment loan market has continued to show momentum.
Speaking to host Alex Whitlock on Broker Daily Uncut, the brokers discussed what they described as a contradiction emerging in the market, where tighter conditions would typically signal a slowdown, yet activity levels suggest otherwise.
The trio noted that clearance rates across the capital cities have held firm, and investor demand has not materially eased.
“It’s doing the opposite of what you’re actually what the economics is telling you that it should be doing,” Arvanitopoulos said.
“With inflation going up, interest rates going up, you would expect demand to come down, but it’s doing the total opposite. It’s actually going higher and higher.”
Lenders move to secure investor market share
Despite tighter market conditions, banks continue to push into the investment loan segment.
According to data from the Australian Prudential Regulation Authority (APRA), Australia’s investor mortgage market has expanded to a record high, with total outstanding housing investment loans reaching $778.1 billion in November 2025.
This represents an increase of about $51 billion over the year, equivalent to around 7 per cent growth between November 2024 and November 2025.
The Commonwealth Bank of Australia recorded the largest expansion of its investor mortgage book, growing its balance by 9.5 per cent over the same period to $211.7 billion.
Similarly, the Australian Bureau of Statistics (ABS) recorded record lodgements in investment loans in the December 2025 quarter.
The number of new investor loan commitments (seasonally adjusted) totalled 60,445 in 4Q25, out of 149,434 total commitments.
This was up 5.5 per cent from the September quarter 2025 and 23.6 per cent from the same quarter the previous year.
Since the Reserve Bank of Australia lifted the cash rate by 0.25 percentage points earlier this month (3 February), Loisance and Arvanitopoulos said they have continued to see strong demand from both lenders and investors.
“It’s an interesting market,” Whitlock said.
There’s a lack of visibility about where rates are going to go. But the upward cycle would appear to be whether we’ve got another one or two rate hikes.
“But in contrast, or I suppose maybe in unison, you’ve got a property market that is showing resilience, you’ve got clearance rates that are still fairly strong in all the capital cities. You’ve got Perth that just keeps marching forward, and you’ve got buyers that certainly have an appetite to buy. It’s really interesting,” Whitlock said.
Last week, Westpac informed brokers of key updates to its investor loan products, including changes to the maximum interest-only term and loan-to-value ratio (LVR) settings.
In an email seen by Broker Daily, Westpac said it is increasing the maximum interest-only term on eligible investor loans from 10 to 15 years for loans up to 80 per cent LVR.
The major also advised brokers that it is increasing the maximum LVR on LMI investor loans (P&I) from 90 per cent to 95 per cent.
Loisance said: “You’ve got sort of fears around the economy, and yet you’ve got lenders that are looking at the investment market, so obviously making a valuation on the security of their loans. They must feel that the market, if you’re lending at 95 per cent, you feel there’s good legs.”
Investor demographics shifting
Brokers also report a shift in investor demographics, with more younger borrowers entering the market. These clients are often supported by family guarantees or higher-LVR lending structures.
Arvanitopoulos said: “When I started over 10 years ago, the investors I used to deal with were more middle-aged people on a good income and quite established already. That was pretty much 90 per cent of the investors I was dealing with, now you’ve got kids that are like 20 years old.
“The way people do things has changed, and the pool of investors is a lot bigger and starts a lot earlier.”
Whitlock suggested the increased appetite to invest may reflect a broader cultural shift in attitudes towards money.
“You go back a generation, and my parents didn’t talk about money. My parents wouldn’t have a single conversation about money, but would do it behind closed doors. Now, you’ve got a generation of people who’ve grown up where they’re more open,” Whitlock said.
“You’ve got a general uplift through things like social media. Now you’ve got a cohort of younger investors who want to make money and want to make money quickly.
“There’s a general education among younger people that they can also benefit by getting into the property market.”
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