A new study by PropTrack shows investor activity is heating up, approaching levels we haven’t seen in nearly 10 years — and the rental market is playing a major role in the shift.
Over the past 18 months, new investor loans have surged, coming close to the highs recorded in early 2022. A big driver behind this is the increasingly tight rental market. With rental vacancies low and prices climbing, many investors are seeing a solid opportunity to get in.
Adding to the momentum are recent interest rate cuts by the RBA, which have sparked renewed optimism across the property market.
Investor lending is now outpacing that of owner-occupiers. PropTrack economist Angus Moore said investors currently make up “a very substantial share of new lending – close to as high as we’ve seen in a couple of decades.”
This trend is showing up across most of the country, with one notable exception: Victoria. Where are investors heading? NSW is leading the way, with nearly 42% of new loans going to investors. But regional Queensland is gaining traction too, with strong rental yields and more affordable entry points.
Other data backs up PropTrack’s findings. Investor activity bounced back strongly in the March 2025 quarter, up 19% from Q1 2024 and just 3% below the record set in June 2022.
Investor borrowing rose from $22 billion in early 2023 to $32 billion by March 2025, with much of that growth driven by tight rental markets, improving property values, and growing confidence in the direction of interest rates.
The Reserve Bank’s recent rate cuts have played a big role, and lenders are responding. Some banks have dropped investor loan rates, with variable rates now as low as 5.5% for some borrowers.
Refinancing is booming too. Nearly 174,000 investor loans were refinanced in the past year as borrowers shop around for better deals. If you haven’t reviewed your loan recently, now could be a good time.
Inflation Hits 4-Year Low, Rate Cut Hopes Rise
Inflation has dropped to its lowest level since 2021, raising expectations of an interest rate cut as early as July.
ABS data shows headline inflation fell to 2.1% in May, down from 2.4%, while the RBA’s preferred measure — trimmed mean inflation — eased to 2.4%, the smallest increase in over three years.
With inflation now sitting in the RBA’s target range for six straight months, the Commonwealth Bank has brought forward its rate cut forecast to July. Treasurer Jim Chalmers called the progress “substantial,” though cautioned the fight isn’t over yet.
With more rate cuts expected and rental demand still high, investor activity is likely to stay strong through the rest of 2025.
