Record-breaking May for mortgages as refinances increase: AFG
Australian Finance Group (ASX: AFG) has today released its monthly mortgage index for May 2015. A surge in the number of borrowers looking to refinance their mortgages saw the total home loans processed last month by AFG rise to a record-breaking May. AFG processed a total of $5,017 million during May – an increase of 18.9% on May 2014, and of 14.5% on April 2015. This is the second month this year that AFG has broken through the $5 billion barrier – the first being in March.
AFG’s Mortgage Index reveals shifts in the mortgage market, with the proportion of loans processed for investors softening, while those for refinancers increased. Investment loans moderated from 43.1% of all borrowers in April to 40.9% in May in an early indication the APRA driven lender policy and pricing changes may be starting to have an effect. The proportion of existing borrowers arranging new home loans comprised 38.2% of all loans, compared to 33.9% in April. The average proportion of refinancers for the 12 months leading up to May was 35%.
Fixed home loans spiked from 13.6% in April to 15.2% of all loans processed in May as more borrowers chose to fix the rate on all or part of their loans.
Brett McKeon, Managing Director said: ‘Interest-rate cuts, like the one we had in April, not only encourage new borrowers – but also prompt existing borrowers to review their arrangements. After the April rate cut, it appears many borrowers came to the view that we are at, or very close to, the bottom of the interest rate cycle.
The attractive owner occupier offers available from lenders, along with the changes that are occurring in the investment market, make it a very busy time for brokers.
Non-major lenders fought back to recover some of the ground they lost to major lenders during the first four months of the year, increasing their combined share from 25.3% in April to 28.1% in May.
News and Data.
AFG Mortgage Index – Going Forward
Historically AFG has released the AFG Mortgage Index on a monthly basis. AFG will continue to do so for June 2015, however, following AFG’s successful listing on the ASX, AFG has determined that the AFG Mortgage Index will then be published on a quarterly basis from July 2015 (ie the first quarter will reflect the 3 months ending 30 September 2015) on the ASX markets announcements platform and on AFG’s website. This change follows a review of AFG’s market reporting and disclosure activities as a newly ASX listed entity.