Mortgage Index – February 2010


A dramatic slump in mortgage sales in January has prompted AFG, Australia’s largest mortgage broker, to warn the RBA that another rate rise in February would be a crippling blow to the country’s fast-shrinking property markets. AFG arranged $1.5 billion of mortgages in January – 47% less than the $2.9 billion it arranged in September last year and an 18.7% fall on its December sales.

The $1.5 billion figure for January is the worst figure the company has posted in any one month since January 2005.

In the past four months, mortgage sales have fallen steadily as first home buyers have exited the market, and upgraders have reacted to three rate rises in quick succession by freezing further borrowing.

AFG has over 2,100 member brokers nationally and over 10% of the total mortgage market (Source: ABS and AFG data).

Brett McKeon, Managing Director of AFG says: ‘The impact of three rate rises in quick succession has had a far more dramatic effect on property buying than anything we saw during the Global Financial Crisis. People are not moving or upgrading their family homes – they’ve slammed the brakes on borrowing.

‘We’ve seen a lot of data recently about rising house prices and increasing consumer confidence, all of which would suggest buoyant property markets. But the opposite is the case. The drip feed of rate rises is like water torture – people are anxious about when the next one is coming and how big it will be. Uncertainty about the future of rates is draining confidence out of the market.’

The AFG Mortgage Index showed refinancing edge higher again in January to comprise 36.2% of all new mortgages. Property investors were the only group of buyers to hold steady, comprising about a third of all new mortgages arranged.

Download – February Mortgage Index – National