Mortgage Index – February 2011


The number of mortgages processed in January was the lowest recorded by AFG, Australia’s largest mortgage broker, since the inception of its Mortgage Index in 2004.

AFG’s Mortgage Index shows that mortgages processed in January (a volume of $1.3 billion) were 40% below the average monthly figure recorded during 2010. AFG has 10% of the total mortgage market nationally and its figures are usually strongly indicative of ABS statistics published six weeks later.

Queensland was the worst affected state, with only around half (48.9%) the number of mortgages that were processed in December. But other states were very badly affected, with month on month sales down by 39.6% in Victoria, 33.6% in South Australia, 31.8% in New South Wales and 28.6% in Western Australia.

Kevin Matthews, Executive Director of AFG says: ‘The flooding in Queensland is a human tragedy of major proportions. As we may have expected, the floods have dealt a significant blow to the local property market. But the disaster has affected sentiment across the whole country. In times of national crisis, people hunker down and put off major buying decisions.

Additionally, consumer confidence is being adversely affected by the huge discrepancies between so-called experts on where property markets are heading. Some tell us real estate is over-valued by up to 40%. Others are telling us we’ve hit the bottom and should expect prices to pick up. All of this is undermining the confidence of potential buyers.’

Loan to Value Ratios – loans stated as a proportion of property values – fell significantly in January to a low of 54.9%, having remained in the 60% – 65% band for most of the past year, suggesting that those buyers who did arrange mortgages in January, were borrowing cautiously, having significant deposits or equity in their existing properties.

January’s Mortgage Index showed a surprise spike in First Home Buyers, up to 14.1% from 11.4% in December. First Home Buying activity was particularly pronounced in WA (17.5% of mortgages processed) and NSW (14.8%). The mix of investors, upgraders and those seeking refinance remained approximately in line with recent trends.

Download – February Mortgage Index – National

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