Mortgage Index – November 2009


The mortgage market cooled in October as the number of first home buyers fell by 27% from September and the early October rate rise created caution among property buyers in general. The AFG Mortgage Index, published by Australia’s largest mortgage broker, shows that the total volume of home loans advanced to first home buyers fell from $489 million in September to $357 million in October. This contributed to an overall month—on-month contraction in the mortgage market of 11.5%, with the total volume of mortgages arranged by AFG falling from $2.9 billion in September to $2.6 billion in October.

The sharp fall in first home buyer activity was expected, given that September was the last month of the reduced federal grant. But AFG is the first company to quantify the drop. At their peak in March, when first home buyers were rushing to beat what they believed could be an end of financial year deadline, first home buyers comprised 28% of the total mortgages arranged by AFG – a volume of $732 million. By October that figure had halved to $357 million.

Mark Hewitt, General Manager of Sales and Operations says: ‘Most people were expecting a fall in first home buyer activity, so the decline, in itself, comes as no surprise. But the fact that the rate rise cycle kicked in at the same time delivers something of a double-whammy. With the second rate rise announced last week we’re expecting that there will be continued caution on the part of buyers.’

The AFG Mortgage Index shows that LVR’s – the value of loans expressed as a percentage of the value of properties – fell across Australia in October, confirming the exodus of first home buyers, who usually have smaller deposits and therefore high LVRs.

The decline of first home buyers was strongest in WA, where the volume fell by 35.5%. In Queensland the fall was 27.6%, New South Wales 26.2%, Victoria 22.3% and South Australia 13.1%.

Download – November Mortgage Index – National