Mortgage Index – June 2011
SURPRISE UPLIFT FOR MORTGAGES AS INVESTORS SWOOP: MAY FIGURES
Mortgage sales increased by 18.8% in May as investors took advantage of softer market conditions according to AFG, Australia’s largest mortgage broker. While May is traditionally a strong month for sales before the quieter winter period, AFG Mortgage Index figures showed surprising strength, after a disaster-hit first quarter, and subdued figures for April. Total mortgage volume for May was $2,517 million – only 1.7% lower than the figure recorded for May last year ($2,561 million).
AFG processes 10% of all Australian mortgages (Source: ABS and AFG data) and its trend data is usually strongly indicative of ABS figures published six weeks later.
Victoria and New South Wales saw the biggest month on month upswings in mortgage volumes, increasing by 27.2% and 23.3% respectively. Both states also had the highest proportion of investment loans with 38.8% of loans in Victoria and 37.9% of those in New South Wales, processed for investors. May also saw a surprise increase of investment loans in Queensland, up to 36.5% – its highest such figure for well over a year.
Mark Hewitt, General Manager of Sales and Operations says: ‘Property investment has remained at consistent levels throughout the ups and downs of the property cycle, but strengthened significantly in May. It is certainly a buyer’s market right now, and investors looking at rising yields are probably better insulated from the impact of rising interest rates than other types of buyers.’
Refinancing remained steady at 36.8% despite higher levels of competition between lenders, and the abandoning of exit fees by many. It seems that many borrowers have adopted a long term view of their lender relationship, as encouraged by AFG.
Non major lenders captured greater market share than in recent months, with 19.6% of all mortgages processed in May for non major lenders (New Table 3). The non majors were best supported by First Home Buyers, 22.9% of whom chose a non major, and least supported by investors, (17.0%), probably indicative of established relationships with major lenders.
The proportion of fixed rate loans rose slightly to 8.4% from 6.4% in April as more buyers chose to lock in rates.
Download – June Mortgage Index – National