Investor loans have been on the rise across Australia for a number of years, with most states showing a notable surge in activity.

According to the PropTrack data, the number of investor loans is nearing levels not seen in almost a decade.

Money.com.au reported in March that the number of investment loans increased 22% over the prior 12 months, compared to a 6% increase in the number of owner-occupier loans in the same period.

Amidst tight rental markets and lower mortgage rates, investors are capitalising on strong opportunities to maximise their returns. If you’ve been considering entering the property market or expanding your property investment goals, now might be the time to act.

What’s Driving the Surge in Investor Loans?

Several factors are fuelling the current growth in investor activity.

• Tight Rental Markets: Rental availability is at record lows, leading to significant competition for rental properties. This has driven rents upward across most Australian states, making property investment increasingly lucrative.
• Improved Lending Conditions: With declining mortgage rates and increased bank competition, accessing finance has become more advantageous for investors.
• Potential Long-Term Gains: Many investors recognise that this moment presents an opportunity to enter markets that offer robust rental growth and future capital appreciation.

State-by-State Highlights

Victoria – The Lone Exception

Investor activity in states like Queensland, New South Wales, and Western Australia has surged, but Victoria remains an outlier. Investor loans here have not picked up to the same extent as in other areas.

A few factors may explain this slower growth in Victoria:

• Lower comparative rent growth than other states
• Recent policy changes, such as adjustments to land tax
• Higher investor sales, which have reduced the number of rental properties available

While Melbourne rents remain more affordable than those in other capital cities, they lag in growth, making returns less attractive to investors currently.

Queensland Leading the Charge

Queensland has seen a particularly strong increase in new investor loans. For example, investors purchasing properties in Brisbane can take advantage of lower initial home prices compared to Sydney and Melbourne while benefiting from consistent rent growth due to high demand.

New South Wales and Western Australia – Competitive Markets

NSW continues to be a robust market for investors due to high demand and limited supply. Western Australia is seeing growth in both investor activity and rental yields, particularly in regional hubs, making it an appealing option for those seeking diversified investments.  

How Lower Rates are Fuelling Activity

Declining mortgage rates are a key factor enticing investors back into the market. For example, with the cash rate coming down by 0.50% since February this year, new opportunities have opened up for investors to enter the market with less financial strain.

Example:

An investor borrowing $500,000 for a rental property might pay around $2,840 per month at a 6.5% rate. Refinancing into a loan with a 5.3% interest rate could reduce their monthly expense to $2,500, freeing up $340 monthly to reinvest elsewhere or offset other costs.

Rental Demand Adds to the Appeal

The current rental market has become one of the strongest drivers of investor activity. A scarcity of rental properties has driven prices higher, ensuring better returns for landlords.

Cotality (formerly CoreLogic) reported that vacancy rates are maintaining almost “historic lows, tracking at 1.7% nationally in July” combined with “evidence of reaccelerating growth trends”.

“On a seasonally adjusted basis, national rents were up 1.1% over the three months ending July, up from a recent low of 0.5% through the September quarter last year,” said the Monthly Home Value Index, July 2025.

These trends make property investments attractive not only for capital gains but also for immediate cash flow benefits.

How to Get Started

If you’re considering investing in property, here are some essential steps to make the most of current market conditions:

1. Understand Your Goals. Are you seeking cash flow via rental income, long-term capital appreciation, or both? Your investment strategy should align with your financial objectives.
2. Do Your Research. Analyse the performance of specific suburbs and states. Look for areas with low vacancy rates and strong rental demand.
3. Secure a Competitive Loan. Partner with a mortgage broker to identify the best loan solutions tailored to your financial circumstances. A small reduction in rates can save you thousands over the life of your loan.
4. Plan for Long-Term Success. Be mindful of potential future changes in interest rates, maintenance costs, or government policy. Smart investors prepare for fluctuations in market conditions.

How Mortgage Brokers Can Help

At Y Home Loans, we understand the ins and outs of the property journey. Our experienced mortgage brokers can provide tailored support to help you find a loan that fits your goals, whether you’re purchasing your first investment property or growing your portfolio.