HORSE ALREADY BOLTED ON RATE FEARS: OCTOBER DATA
AFG CALLS FOR CANBERRA LEADERSHIP IN STALLED HOME LOAN MARKET
AFG, Australia’s largest mortgage broker, has called for leadership from Canberra to shake the fear out of a stalling mortgage market as the company reported its worst October mortgage sales for four years. AFG arranged $2.2 billion of mortgages in October – down 17.5% in volume compared to October 2009 and 4.3% lower than last month, which was already subdued.
NSW was the worst affected state, where mortgage sales fell 13.1% month on month. Victoria and WA saw falls of 3.9% and 4.3% respectively, while QLD and SA bucked the trend, with rises of 6.4% and 5%, although on relatively low, September figures.
Commenting on current market conditions, Brett McKeon, Managing Director of AFG says: ‘The idea of holding some sort of commission into banking competition and rate setting is farcical. Everyone knows that the best way to keep rates keen is to promote competition. But by allowing the 5th and 6th largest banks to be taken over by the Big Four, and by structuring the AOFM to benefit only the Big Four, no one has more effectively sabotaged lender competition in Australia than this Government. If it goes ahead with a commission, to avoid selfincrimination the Government will have to restrict the terms of its inquiry so much that its findings will be meaningless.
‘Right now we’re suffering from a failure of leadership. All the data suggests that ordinary Australians are worried about rate rises. They are in lock down mode, saving their money, instead of spending it, which would be healthier for the economy. The politicians in Canberra are responding to this fear with populist claptrap about inquiries and regulation, but the horse has already bolted and unless something is done it will take half a decade to see proper competition return. What’s really needed is a circuit-breaker. The fundamentals of our economy are strong, but most Australians are rightly anxious because they sense a lack of leadership, even coherence, in economic policy.’
The AFG Mortgage Index showed a continued rise in Fixed Interest mortgages in October as consumers responded to rate worries. These comprise 6.3% of mortgage sales, having climbed steadily since comprising 3.4% in July 2010.
There were proportionately fewer First Home Buyers in October (11.8% of all mortgage sales) compared with September – 12.6% – reversing a trend of the past three months which had seen this sector recover somewhat from its post-First Home Owner Grant low.
Download – November Mortgage Index – National