Mortgage Index – January 2011


But trend to Fixed Rate mortgages shows consumer caution

Total mortgage sales fell by 10% in 2010 compared to 2009, according to AFG, Australia’s largest mortgage broker, which processes one in ten mortgages in Australia. AFG Mortgage Index shows a total of $27 billion of mortgages was processed in 2010, compared with $30 billion the year before. The performance of different states varied dramatically with the mortgage market contracting most in Queensland (-23.6%), South Australia (-22.9%) and Western Australia (-13.7%), dipping slightly in New South Wales (-2.8%) and recording positive growth in Victoria (+6.6%).

Data for December 2010 shows sales were 9.1% above those of December 2009. Mortgage sales in all states trended positively compared to the previous December, led by Victoria (+18.1%), NSW (+14.8%), WA (+6.1%), SA (+4.9%) and QLD (+1.4%).

Mark Hewitt, General Manager of Sales & Operations says: ‘2010 was a very challenging year because of interest rate rises, issues with competition and fears surrounding the mining tax. It is ironic that the resource states were the worst performers in residential property last year – for a while, the housing market almost froze. But the data we’ve been seeing since November suggests the return of cautious optimism. While the floods in Queensland will be a setback, we are starting to see a greater level of activity returning to the market in general. This is being aided by increasing competition from the non major lenders.’

AFG Mortgage Index also shows the proportion of fixed rate mortgages increased to 12.6% of the market, after a steady rise from 3.4% in July. Fixed rate mortgages comprised only 2.0% of the total mix a year ago. Their rise in popularity reflects increasing consumer concern about the future of interest rates, as well as aggressive marketing of this loan type by lenders. Refinances also increased to 41.5% of all loans written as borrowers responded to out of cycle rate rises.

Download – January Mortgage Index – National

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