AFG Mortgage Index – September Quarter 2016

Loans lift as new financial year gets underway

Australian Finance Group (ASX: AFG) has today released its Mortgage Index for the first quarter of financial year 2017. AFG’s overall loan lodgement volume recorded a lift of 8% from the first quarter of the 2016 financial year to be sitting at a record $15.19 billion.

AFG General Manager Sales and Operations Mark Hewitt said this result was largely driven by existing homeowners looking to save. First home buyers are still in the single digits and investors are steady, albeit at a lower level than seen across the last three years.

“Refinancers are driving the activity with a lift from 36% at the beginning of the 2016 financial year to peak at 39% in the last quarter and close steady the first quarter of the 2017 financial year at 38%,” said Mr Hewitt.

Upgraders were also at historical highs across the last financial year and are sitting at 34% again as we finish the first quarter of FY 2017.

“As these figures show, Australian home buyers are aware that rates are at historical lows and there are savings to be made. If you have a home loan and your interest rate isn’t below 4%, it would be wise to get in touch with a mortgage broker to ensure you are maximizing your opportunity to save’ he said.

Borrowers choosing to fix their interest rates are down from 18.7% last quarter to 15.9% this latest quarter. “For those borrowers with a fixed rate product, I would encourage them to check in with their mortgage broker once the fixed rate period is over as many fixed rate loans can revert to a significantly higher rate than may be available in the market at the time.

“An AFG broker can provide true choice across lenders and products and is in the best position to be able to provide those alternatives and ensure their customer has the right lending solution,” said Mr Hewitt.

Investment lending is down from 34% last quarter to 32%, amid tightening by lenders of investment lending conditions and continued talk of apartment oversupply.

“It is well documented that over the past 12 months regulators have been ‘encouraging’ lenders to tighten up on their investment lending in some areas and they have responded with policy changes and a reduction in discounts being offered.

“It is important to remember that investment lending is often an area where a borrower can really benefit from the assistance of a mortgage broker who knows which lenders are still in the market and the right way to structure finance to meet the needs of the customer,” concluded Mr Hewitt.

Download full report: AFG Mortgage Index Report