AFG Mortgage Index – December Quarter 2016

Tale of two seaboards

AFG (ASX: AFG) has today released the AFG Mortgage Index for the final quarter of the calendar year 2016. The data shows year on year growth in lodgement volume for the company of 9.9%.

AFG Chief Operating Officer David Bailey explained the results. “2016 saw the eastern seaboard lead the way with Victoria recording an increase of 23% for the year. After a number of years of lacklustre activity it has been encouraging to see Queensland record 18% growth across the twelve months. Continued growth was also evident in NSW with a 10% increase in lodgements for the year.

“The remainder of the country tells a different story,” said Mr Bailey. “South Australia remained flat across 2016 and the tough time experienced by the WA economy was evident with a 16% drop for the year. The Northern Territory also showed a drop of 18% across the year.

“A recent increase to the First Home Owners Grant and a relaxation in eligibility requirements for Keystart lending is clearly an attempt by the WA state government to help lift the housing market and stimulate the construction sector in that state.

Loan to Value ratio (LVR) remained relatively consistent across the twelve month period at 69%. “The national LVR for the final quarter of 2016 was 0.7% lower than the same period in 2015, which is good news as this means owner equity has improved. Historically the national LVR has been sitting within the 69% range across 2015 and 2016,” said Mr Bailey.

As highlighted in the most recent AFG Competition Index, non-major lenders have been taking market share from the majors. “The major banks dropped market share across all sectors of the market in the final quarter of 2016,” said Mr Bailey.

“Many lenders have been increasing fixed and variable interest rates and have tightened lending to investors. This has encouraged consumers to examine their own situation and we are seeing many pick up the phone to their mortgage broker to determine if their loan is still the most appropriate for their circumstances.

“We expect this trend to continue into the new calendar year as an increasing number of consumers recognise that a mortgage broker is in the unique position of being able to provide a comprehensive view of the alternatives available across lenders and products,” he concluded.

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