ONLY 15.4% OF NEW MORTGAGES SOLD TO UPGRADERS AS ECONOMIC WORRIES DEEPEN: MAY FIGURES
Only 15.4% of all mortgages arranged in May were sold to people upgrading or moving home according to AFG, Australia’s largest mortgage broker. AFG Mortgage Index shows that the largest proportion of mortgages (38.0%) were arranged for refinancing purposes followed by 36.7% for investors and 9.9% for first home buyers. The 15.4% of upgraders is the lowest recorded for a year, and significantly lower than the 18.0% average for the last six months of 2009 before the rate rise cycle started to bite.
Investors continue to dominate the market, with the proportion of mortgages sold to them – 36.7% – much the same as last month’s peak of 36.9%.
Mark Hewitt, General Manager of Sales and Operations for AFG says: “May was very much a month of two halves for us. We started the month with strong demand, particularly from investors, but the May rate rise, combined with all the other worrying economic news, really took all the heat out of the market. I have just spent the past week meeting many brokers from around the country and the feeling is one of deepening concern. After a period of rebuilding confidence and return to normal market conditions last year, people are feeling quite uncertain about the state of the economy.”
The AFG Mortgage Index shows refinancing at very high levels, as borrowers respond to interest rate hikes by shopping around for better deals. The 38.0% figure recorded for May is the highest such figure since October 2008.
Uncertainty about the future of interest rates is evidence by the fact that 76.7% of buyers opted for variable loans, with only 2.9% choosing to lock in rates. Mortgage sales in Queensland and Victoria were more robust than in other states, registering month on month increases of 15% and 9% respectively.
Download – June Mortgage Index – National