Mortgage Index – August 2008
FIRMER AFG MORTGAGE SALES DESPITE POOR CONSUMER SENTIMENT: JULY FIGURES
AFG mortgage sales figures were 17% higher in July than June suggesting an increase in market share, according to Australia’s largest mortgage broker. AFG Mortgage Index shows that the company arranged $2.4 billion of mortgages in July compared with $2.0 billion in June. In previous months, AFG has had an estimated 10% of the national mortgage market (Source ABS and AFG data).
On an annual comparative basis, July sales were 14.1% lower than in July 2007, but this yardstick suggests a bottoming out, after comparative declines for June 2008 of 22% and May 2008 of 28% when measured against the same months in 2007.
Malcolm Watkins, Executive Director of AFG says: “Consumer confidence is at an all time low, although in recent days there has been some encouraging signs with lower crude oil prices and the prospect of an RBA cash rate cut in the not too distant future. However consumers will only benefit if these savings are passed on. The official RBA rate may no longer be the benchmark for home loan pricing, rather competitive tension will determine delivery rates to borrowers. Only robust competition between lenders will ensure that borrowers benefit, the big 5 banks now account for a far greater share of the market, compared with a year ago. We’d like to see the Government act quickly to stimulate genuine competition in the sector.”
AFG Mortgage Index also shows that refinancing hit a record high, with 40.8% of all new mortgages being for refinancing purposes. Much of this refinancing marks a move away from non-bank lenders to the Big Four banks, underlining AFG’s call to the Government to stimulate competition in the sector.
AFG Mortgage Index shows the proportion of Fixed Rate mortgages also fell to the lowest on record – 7.9% – compared with a high of 25.3% just 5 months ago, as expectations about the next rate movements change.
Download – August 2008 Mortgage Index – National