Mortgage Index – April 2012


One in four new borrowers in March chose to lock in their home loan rate, according to figures released today by AFG, Australia’s largest mortgage broker. AFG Mortgage Index shows that fixed rate home loans comprised 25.4% of all new home loans, having risen steadily as a proportion of all home loans for the past eight months. In March 2011 fixed rate loans comprised 6.6% of new home loans and in March 2010 just 2.5%.

AFG Mortgage Index also shows a clear divide in the drivers of mortgage markets in the Eastern and Western seaboards. Investors continue to dominate the NSW market, accounting for two out of five new mortgages – a proportion which has held fairly steadily for most of the past year. Victoria has a marginally lower level of investment interest, just under 40% and in Queensland, mortgages for investors comprises about a third of all home loans.

By contrast, investment interest in WA has been reducing since last December, and is currently just above a quarter of all new home loans. However, first home buyers are more active in WA than any other state, comprising 20% of the mortgage mix, by far outstripping NSW (on 13.4%), VIC (15.2%) and even QLD (16%), which is known for its affordability.

Mark Hewitt, General Manager of Sales and Operations says: ‘The reason that fixed rate home loans are at such record highs is quite simply because many borrowers are concerned about the future of interest rates. This nervousness probably also accounts for the weighting of investors in the property market – there’s a lot of them proportionally because first home buyers and upgraders are sitting on their hands. There’s a disconnect between what’s happening in the non-mining economy – which is most of us – and out of cycle rate rises. The best thing the RBA could do to stimulate confidence among buyers and upgraders would be to cut interest rates tomorrow.’

The AFG Mortgage Index also shows that for the second month in a row, the average new home loan across Australia was above $400k ($404 in March). However, LVRs remain steady, indicating that buyers are not taking on greater levels of debt to fund their purchases. This also reflects the large proportion of investors in the market, who typically use equity in one property to help pay for another.

Download – April Mortgage Index – National

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