Australian Finance Group (ASX: AFG) has today released its Mortgage Index for the first three months of 2016.
The quarter saw a greater proportion of home loan customers continue to take advantage of low rates by fixing their home loans. The start of calendar 2016 has seen lending for fixed rate products peak at 17.7% of AFG’s total volume for the quarter. By comparison, the percentage of those fixing their rates in the first quarter of the 2016 financial year was as low as 11.4%.
AFG General Manager Sales and Operations Mark Hewitt said “With sections of the money market making the call of a rate cut in the coming months there are some very attractive fixed rates available. With rates being at historical lows the downside risk of fixing is relatively small so many borrowers are choosing to lock in now.”
“Despite this month’s decision by the Reserve Bank of Australia to leave the cash rate on hold at a record low 2% there are also no guarantees lenders won’t make their own moves outside the RBA cycle. Some are talking about increased funding and regulatory costs and locking the low rates in now is a way borrowers can insulate themselves against any out of cycle increases by the banks. This quarter has also seen investor numbers on the rise again, with an increase from 31% of AFG’s total volume to 33% as lenders return to the investor market having fallen below the growth cap set by the regulator last year.”
AFG’s overall volume was up 5.7% on the same quarter in 2015, with Victoria leading the states with an increase of 15.7%, followed by SA up 11.3%, NSW up 10.5% and Qld recording a rise of 7.6%. The resources downturn has hit WA activity with that state recording a drop of 16.7% and NT dropping by 28% on the same time last year.
“In a positive message for the health of the lending market, the average LVR (loan to value ratio) of 68% is the lowest it has been for three years,” said Mr Hewitt. “This means homebuyers are continuing to borrow within their capabilities.”