Mortgage Index – January 2010


Two out of every five mortgages arranged in NSW in December were for investment properties according to AFG, Australia’s largest mortgage broker. The AFG Mortgage Index shows that increasing interest in NSW property saw the state end the year with $180 million invested in properties in December 2009 – compared to $153 million in December 2008 – a 17% increase. AFG has approximately 10% of the NSW market (Source: ABS and AFG statistics).

However the overall mortgage market in December marked a third month of decline. In September AFG arranged $2.9 billion of mortgage finance nationally, but this figure fell to a low of $1.9 billion in December.

Mark Hewitt, General Manager Sales & Operations of AFG says: ‘We have been warning for months that three rate rises in a row was overkill for a vulnerable market, and the latest figures confirm our fears. Yes, December is traditionally a slower month than November, but what we saw last month was a 20% fall compared to an 8% fall in 2008. When you combine the effects of increasing, out of cycle lending rates and tighter credit criteria with an end to the first home boost, what you get is a combination of factors that constrains confidence. Property investors, able to take a long term view, are hoping to ride a new upward cycle in property values, but right now ordinary families are sitting on their hands rather than upgrading.’

The AFG Mortgage Index also shows that fixed rate mortgages fell to an all time low of only 2% of the total product mix, with 77% of buyers opting for variable rate mortgages, and the balance choosing equity or introductory mortgages. The 2% figure is the lowest ever recorded by AFG, which saw fixed rate products average 22% of the product mix in 2007, 12% in 2008 and 4.36% in 2009. Given that the market has factored future increases into fixed rate products, from a buyer’s perspective such products offer little perceived advantage in the current market.

Refinancing reached a high for the year, representing 35.5% of all mortgages arranged in December as customers reacted to out of cycle rate rises by some lenders.

Download – January Mortgage Index – National