Upper end resilient as mortgage ‘recession’ confirmed
The national slowdown in mortgage sales continued during June, with the volume of mortgages sold by AFG, Australia’s largest mortgage broker, declining 9.2% on figures for May, and 22.0% compared to June 2007.AFG sold 5,939 mortgages in June 2008, totalling $2 billion in finance, compared with 8,195 mortgages and $2.6 billion in finance in June 2007.
AFG Mortgage Index shows that mortgage sales nationally have now experienced two successive quarters of negative growth – the definition of an economic recession. AFG is Australia’s biggest mortgage broker with 10% of the national market (Source: AFG and ABS statistics).
Also during the past year the average mortgage size has increased from $317k in June 2007 to $341k last month – a rise of 7.5%. Biggest mortgage size increases have been in South Australia (13.5%), Queensland (11.7%) and New South Wales (7.6%), with average mortgage sizes growing by 6.1% in Victoria and holding steady in WA.
Mark Hewitt, General Manager of Sales & Operations says: “At first glance it may seem strange for an industry hit by rate rises to see average mortgage sizes increasing. But what these figures show us is that many people who would normally be taking out smaller or medium size mortgages just can’t afford to. The upper end of the market is proving the most resilient – i.e. buyers with significant equity in their homes or investment properties.”
AFG Mortgage Index also shows the proportion of buyers taking out fixed rate loans has fallen to 11.5% – the lowest figure in nearly three years. Fixed rate loans peaked in November 2007 at 27.3% of all new home loans. The vast majority of new buyers would now seem to think that the future of rates is steady or down, rather than up.
Refinancing through mortgage brokers continues at a relatively high rate of 36.5% of all new mortgages as property buyers continue to seek more competitive deals.
Download – July Mortgage Index – National
