AFG Mortgage Index – June Quarter 2016

Homebuyers on the lookout for savings as financial year wraps up

Australian Finance Group (ASX: AFG) has today released its Mortgage Index for the final quarter of financial year 2016. AFG’s overall loan volume grew by 7% for the full financial year driven by varying results around the country.

AFG General Manager Sales and Operations Mark Hewitt said the result was as forecast by AFG when they released their prospectus last year. “The results today are reflective of how we saw the market tracking.

“The traditional powerhouse states of Victoria and NSW led the way, up 16.6 % and 12.2% respectively. South Australia was up 12.2% for the financial year and Queensland recorded a lift of 4.2% on the previous financial year. On the flipside a drop of 13.4% in WA was not unexpected as the state comes to terms with life post-mining boom.

“Pleasingly the non-majors have lifted to 29.1% of the market,” said Mr Hewitt, with AFG’s own white label AFG Home Loans products finishing the year strongly to generate a market share of 7.2% for the final quarter.

“The numbers are strong despite a turbulent run in to the end of the financial year and the longest election campaign in memory finally coming to a close,” said Mr Hewitt. “Talk of negative gearing changes and changes to investment lending has seen many homebuyers sit on their hands.

When looking at the reasons for home loans being taken out, it would appear many Australians are choosing to shop around for a sharper rate to upgrade the family home.

“Those looking to refinance increased from 37% of AFG’s loans processed for the financial year to 38%. This result is reflective of the high level of competition amongst lenders in this low interest rate environment.” said Mr Hewitt.

“With interest rates at record lows, Australians are quite rightly checking in with their mortgage broker to ensure they are not paying too much for their home loan. The number of people choosing to stay in their homes and upgrade rather than move is also at historical highs, closing out the financial year at 33% of borrowers.

“It would also appear that many Australian home buyers are opting for the safety of knowing what their repayment will be for a set period with the number of people choosing to fix their rates increasing substantially during the year,” he said.

Fixed rate loans as a percentage of overall volume have increased from 14.5% at the start of the financial year to close at 18.7% by the end of the financial year. After peaking at 20% in April and May, the RBA’s decision to drop the cash rate in May saw many homebuyers pull back from fixed rate products as the financial year drew to a close.

“As these figures show, Australian home buyers are aware that rates are as low as they have ever been. If you have a home loan, it would be very wise to get in touch with a mortgage broker to ensure you are maximising your opportunity to save,” concluded Mr Hewitt.

Download full report: AFG Mortgage Index Report

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