Australian landlords take record debt as rental yields fall

Sydney

INVESTORS are pouring into Australian real estate and dominating the market like never before, spurred by low borrowing costs and rising prices. Home loans to landlords now account for more than half of all mortgages, the highest share on record.

The Reserve Bank of Australia (RBA) warned in September that the rise in lending to investors could be "a sign of speculative excess", as the record-low 2.5 per cent cash rate helps drive demand for property.

The risk for landlords is that a rise in bond yields and a continued slowdown in the rental market would spur a property sell-off, causing home prices to fall.

"There's a general hunt by investors for anything that's got income yield," said Louis Christopher, managing director of Sydney-based SQM Research Pty. "That's potentially dangerous and risky because at some point we'll see global bond yields ris…