Mortgage Index – August 2014


Demand for mortgages from brokers surged to an all-time high last month in Victoria according to AFG, Australia’s largest mortgage broker. The AFG Mortgage Index, published today, shows that the company processed $1,09 billion in home loans for Victoria in July – the first time the company has ever processed over $1 billion for any state outside NSW.

Demand for home loans in Victoria was led by borrowers seeking to invest (34.9%) refinance (34.4%) and upgrade (21.1%). Only 9.6% of new loans were for first home buyers, a decline from the previous month (11.3%).

While demand for home loans in Victoria was a massive 44% higher than in July 2013, other states in Australia also showed strong growth last month. Demand in WA was 21.2% higher than in July 2013, NSW 12.8%, QLD 11.6%, and SA 3.7%. Overall AFG processed $4.1 billion in mortgages in July – its second biggest month since the record $4.2 billion recorded in May 2014, and 21% more than in July 2013.

Mark Hewitt, General Manager of Sales and Operations says: ‘Victoria has traditionally been the state with the lowest use of brokers, but this is starting to change. With increasing competitiveness and complexity in the mortgage market, we are seeing a marked shift in borrowers using brokers to help them find the best deal. The resilience of the Victorian market, defying concerns about high-rise over-supply, is another factor underpinning mortgage demand there.’

The AFG Mortgage Index shows the overall proportion of loans arranged for investors softened in July to 38.0%, down from the record high of 40% recorded in May 2014. Consistent with this, the average loan to value ratio (LVR), a loan expressed as a proportion of the value of a property, rose to an average 68.2% from 66.6% in June. Investors typically use equity in existing property to fund their investments, thereby reducing overall LVRs. Victoria’s LVR of 71.2%, like WA’s of 71.5%, are higher than the national average, indicating lower levels of investors, compared with other types of borrowers in those states. 24% of borrowers last month chose fixed rate loans, consistent with previous months.

There was a sharp rise in introductory mortgages, from 7.3% in June to 9.6% in July, as a number of lenders offered attractive start-up deals. These types of loans are traditionally attractive to first home buyers, however last month saw other types of borrowers start to take advantage of the offers.

Broker Technology
Broker Guides

Download your AFG Information Book

Open the book on AFG and find out how we can partner with you to grow your business.

Featured Calculators
Broker Guides

Customer Experience and Workflow Optimisation

Learn why creating repeatable customer experiences could be your biggest revenue growth opportunity.

The AFG Story

Find out how we’ve been helping Australians find a fairer deal for over 27 years.

How we're helping
Looking for the right loan?
Choose your loan type and start comparing products from our lender panel, read the latest finance tips and if you’re looking for expert help, we can put you in contact with an AFG Mortgage Broker.