Mortgage Index – April 2013


Nearly one in three new borrowers locked in fixed rates on their loans during March according to AFG, Australia’s largest mortgage broker. AFG Mortgage Index, published today, shows that 29.6% of all new home loans was Fixed – a leap from 24.1% in February and 16.3% in January.

This is the highest proportion of Fixed rate loans the company has seen in the 10 years it has been compiling the Mortgage Index.

The company recorded its best sales month ever for March, processing $3,181 million of home loans, 8.6% higher than in March 2012, and beating its previous record month of March 2009, when it processed $3,153 million. Growth was largely driven by first home buyers in WA and investors in NSW.

Mark Hewitt, General Manager of Sales and Operations says: ‘We have seen an unprecedented surge of borrowers wanting to lock in rates. With many commentators believing the interest rate cycle is at the bottom, borrowers have responded by fixing rates of less than 5% that have been widely on offer. These rates are very low by historic standards and it makes sense to lock them in while they are still available.’

AFG Mortgage Index shows the continuing weakness of first home buying activity in NSW, where only 4% of new borrowers are first home buyers, and QLD – 5.1%. These figures compare with 15.3% for SA, 18.3% for VIC and 22.9% in WA.

Loan to value ratios (LVRs), which are the value of a home loan expressed as a percentage of the value of the property, were 68.8% in March, consistent with the average over the past year. LVRs were highest in states where there is greatest first home buying activity (WA and VIC – both 70%) and lowest in NSW (66.8%) where investors typically leverage equity in existing properties when setting up new loans.

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