Australian home loan market continues to fire

Naremburn Suburb Top Down

Australian home loan market has hit new highs as the 2022 financial year gets underway.

AFG (ASX:AFG) brokers have lodged a record $24.1 billion in home loan finance for the first three months of the new financial year – almost $6 billion more than in the same period last year.

AFG CEO David Bailey outlined the results: “This is an increase of 7% on the previous quarter and a breathtaking 33% on the corresponding quarter last year. Upgraders remain the main source of lodgements for the quarter at 41%. Investors also drove activity, increasing by 2% on the previous quarter and 6% from this time last year to now represent 27% of the market. First Home Buyers remain at 14%. As cash back offers from some lenders expired, refinance activity fell by 1% from the previous quarter to 26%.

The low interest rate environment is seeing more customers choose a Fixed Rate mortgage to lock in the benefit, with Fixed products at their highest ever level of 38.2%.

“When looking at results across the country, New South Wales is up 35.72% from the corresponding quarter to $8.4 billion and Victoria up a massive 45.73% from Q1 FY21 to $7.8 billion. Queensland lodgements increased by 23.25% on last year to $4.1 billion and South Australia recorded a 20.80% rise on the same period last year to deliver $1.2 billion of home loan lodgements for the quarter. Western Australia continues to climb with an increase of 11.67% on the corresponding quarter to $2.4 billion.

“The national average mortgage size rose above $600,000 for the first time,” he said. “This represents an increase on the same quarter last year of 17% with Queensland increasing 19% year on year, closely followed by Victoria at 18%.

Recent moves by the regulators to rein in the property market will affect borrowing capacity for some homebuyers and reaffirms the importance of seeking help from a mortgage broker to navigate the changes. “In a positive sign of the stability of the market, Loan to value ratios (LVR) were once again down across the board meaning valuations are continuing to outpace the growth in loan sizes and borrowers were not drawing up to the full value of their homes.

“The Big 4 Banks and their associated brands fell by 2% to be sitting at 57.3% of the market. The Westpac group was the big loser dropping from 22.73% to 15% of the market. The other majors all recorded increases in their share.

The AFG broker network have access to a panel of more than 70 lenders for their search for lending solutions in the best interests of their customers. “We have worked very hard over the last 18 months to further bolster our lending panel and provide even more options for our brokers and their customers, including regional and specialised lenders,” Mr Bailey said. “Non-major market share has lifted from 40.7% to 42.7% for the quarter. Suncorp and ING were drivers of the increase, with ING recording a jump in market share from 2.82% to 3.28% and Suncorp rising from 2.75% to 3.18% for the quarter.

Despite record volumes, lender turnaround times (TAT) continued to improve with the average number of days from submission to formal approval dropping back to 21.8 days from 25.2 days in the prior quarter. “We have been urging lenders for some time to increase their level of investment to adequately resource the broker channel and whilst early days, its pleasing to see that this is starting to pay dividends” he concluded.

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