Mortgage Index – March 2009


February was a boom month for mortgage sales as first home buyers rushed to take advantage of grants which come to an end in June, according to AFG, Australia’s largest mortgage broker. AFG Mortgage Index shows that total mortgage sales leapt a massive 40% between January and February this year, compared to the usual 20% increase between those two months. The company, which has 10% of the total mortgage market (Source: ABS and AFG statistics) sold $2.6 billion of mortgages in February – the highest volume since November 2007 when it sold $2.7 billion.

First home buyers were strongest in New South Wales and Victoria, where they comprised 34.5% and 26.8% of all mortgages sold. These high figures reflect the relative weakness of the upper end of property markets, as well as the surge of sales at entry level. Nationally, first home buyers comprised 26.1% of all mortgages sold, with strong figures recorded also recorded in Western Australia (25.2%) and to a lesser extent South Australia (15.6%).

High LVR figures – a loan expressed as a proportion of the value of a property – were recorded in both New South Wales (76.6%) and Victoria (75.0%), confirming the impact of first home buyers, who usually have smaller deposits than people trading up to their second or third homes.

Mark Hewitt, General Manager Sales and Operations says: ‘The dramatic increase we’ve seen in first home buyers over the past four months is a double edged sword. It’s positive in that it underpins the future recovery of mid-level property markets by getting significant numbers of people onto the property ladder. But we’re concerned that if the Government doesn’t announce an extension to the grants fairly soon, we’ll continue to pull demand forward, and will be left staring over a cliff come the end of June.’

AFG Mortgage Index also shows that fixed rate loans fell to an all time low of 2.5% of all new mortgages in February, having peaked at 27% in November 2007. This suggests that almost all those buying or refinancing properties in February believed that rates have further to fall.

Download – March Mortgage Index – National