Mortgage Index – March 2010

INVESTORS STORM THE PROPERTY MARKET AS SECOND-TIER LENDERS STAGE A COME-BACK: FEBRUARY MORTGAGE FIGURES

After a lull over the summer holidays property investors are flocking back to the market according to AFG, Australia’s largest mortgage broker. The AFG Mortgage Index out today shows that 34.1% of all mortgages arranged nationally in February were for property investors – the highest such percentage the company has ever recorded, and a 25% increase on the level of investment loans just six months ago, in August 2009.

The proportions of mortgages arranged for investors were particularly high in New South Wales (38.5%), Victoria (37.2%) and South Australia (37.6%). They were lowest in Western Australia (29.9%) and Queensland (29.5%), although even these figures represent robust levels of investment activity.

Mark Hewitt, General Manager Sales and Operations says: ‘Investor confidence has been rising for several months, but we hadn’t been expecting a figure for February as strong as this one. Investors are now the driving force of the market, encouraged by rising property prices in recent months, and the longer term view that a housing shortfall will continue to underpin future price growth as well as rental yields.

‘We are pleased to see second tier lenders making a strong return in recent months. Borrowers are starting to see these lenders as a genuine alternative to the majors again.’

AFG data shows the market share of second tier lenders continuing to strengthen. Last month the ABS reported that bank lending edged back to 88.1% of all loans in the fourth quarter of 2009 down from a high point of 92.5% in the first quarter of the year. In February AFG’s own data showed bank lending reduced to 83%, with second tier lenders accounting for 17% of all new loans – more than double the proportion compared to the same period last year.

First Home Buyers continue to leave the market, with the proportion of loans arranged for this group falling to 11.3% in February. The only state where this trend was reversed somewhat is NSW which has seen the level of first home buyers increase in the past two months from 14.9% in December to 16.2% last month. But even this figure is about half the volume of first home buyers recorded a year ago.

AFG has over 2,100 member brokers nationally and over 10% of the total mortgage market (Source: ABS and AFG data).

Download – March Mortgage Index – National

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