Rising interest rates have not scared off property investors who still see value in real estate as a result of rising rents and low vacancy rates.

New data from the Australian Finance Group shows investor lending increased in July to 28%, which is the highest it has been since late 2019.

Buyers’ agent Rich Harvey of propertybuyer says rising rents will help investors absorb interest rate rises.

“Investors are lured by higher yields as rents increase by 10% and probably by 15% to 17% by the end of the year,” Harvey says.

CoreLogic research director Tim Lawless says rents are set to continue increasing as demand outpaces supply while SQM Research data puts the national average vacancy rate at a record low 1%.

Louis Christopher of SQM says there are signs that some regional rental markets may have peaked with an easing of vacancies.

Mortgage broker Chris Foster-Ramsay says many property investors are cashed up and ready to buy.