Mortgage Index – November 2008


Mortgage sales rose by 18% in October as a double whammy of record numbers of first time buyers entered the market, and record numbers of existing owners refinanced their properties, according to AFG, Australia’s largest mortgage broker. AFG Mortgage Index shows that the number of first time buyers increased by 60% from the middle of the year as lower rates, more affordable property and first time buyer incentives took effect. Meantime, the proportion of mortgage sales to property owners opting to refinance peaked at an all time high of 40.9% as property buyers voted with their wallets in favour of lower rates offered by the major banks.

AFG Mortgage Index also shows most property buyers in October expected further rate cuts, with a record high of 51.2% opting for standard variable mortgages. Fixed rate mortgages, which peaked in popularity last November at 27.3% now comprise only 4.5% of all new mortgages sold.

The national average mortgage size also created a record $353k – the first time it has breached the $350k mark. In line with this, Loan to Value Ratios, the value of loans expressed as a percentage of property values, also rose to an average high of 68.7% as buyers took advantage of the lower rate regime.

Mark Hewitt, General Manager of Sales and Operations at AFG says: “Despite the turmoil on global markets, these are good times to be a first time buyer. Property prices are more attractive than they have been for a while, Government incentives are more generous than ever before, and rates are on their way down. We’re also experiencing an unprecedented level of refinancing as buyers abandon second tier lenders for the major banks, who now control 89% of the mortgage market.”

Strong growth in mortgage sales was reported across most states – South Australia (39.5%), Victoria (25.1%), Western Australia (22.5%) and New South Wales (19%). Queensland recorded only a 4.5% increase in sales, but it has been less badly affected in previous months than other states. AFG has 10% of the national mortgage market.

Download – November Mortgage Index – National