Worries about rate cuts inflating Australia's debt levels seem to have already dissipated, given the latest financing figures from the Reserve Bank of Australia that showed muted financing demand from both owner-occupiers and investors.

Mortgage lending grew by just 0.2% in September, in line with the muted growth in overall credit. Investor lending, in particular, continued to contract, clocking its third consecutive month of decline.

"Investor housing credit has contracted for three consecutive months, that's never happened before," said REA Group executive director of research Cameron Kusher in a tweet.

He said this could only mean that investors have not been driving the housing demand in recent months.

"Also that more principal debt is being paid down by investors given move away from IO," he said.

Investor activity to pick up?

An analysis by CoreLogic said investor activity is likely to ramp up, given the improving prospects for capital gain.

In fact, capital city gross rental yields are tracking at 3.7%, compared with three-year fixed-rate mortgages for investment purposes sitting around 3.8%.

"In the past, rising home values and greater participation from investors have seen first home buyer activity reduce," CoreLogic head of research Tim Lawless said.

The current low interest-rate environment could be one of the reasons behind this, allowing investors to look for cashflow-positive properties, said Jeremy Sheppard, Select Residential Property head of research.

"This assumes an 80% loan-to-value mortgage with a 4% interest rate and another 1.5% of the property's value being lost to other expenses such as council rates, property management and repairs and maintenance," he told The Australian Financial Review.