Mortgage Index – October 2010

NO SPRING BOUNCE IN MORTGAGE SALES: SEPTEMBER DATA

AFG CALLS ON RBA TO HOLD RATES

AFG, Australia’s largest mortgage broker, has called on the RBA to hold rates steady as mortgage sales data for September, published today, shows the traditional spring increase in mortgage sales failed to materialise this year.

Instead of the usual 10% increase in mortgage sales over August, this year’s September’s data was almost identical (-0.3%) as the month before.

September sales figures were 20% lower than for September 2009 with the two resource states showing the largest drop in comparative statistics. Queensland recorded a 31.8% fall and Western Australia a 25.8% fall compared to figures for September 2009, as uncertainties about the future of a possible mining super tax continue to affect property buying behaviour in both states.

The caution of consumers is further underlined by a jump in the take-up of fixed rate mortgages from 3.9% of all mortgages sold in August, to 5.4% – the highest level for fixed mortgages since June 2009. This suggests that more buyers expect further rate rises in the near term.

Mark Hewitt, General Manager Sales and Operations says: ‘This latest data confirms what we’ve been seeing from other sources – that there is a lot of caution and uncertainty in the market right now. Potential property buyers are still digesting the previous six rate rises and uncertain economic messages. Another rate rise could have serious ramifications on the market.’

AFG Mortgage Index also shows that Loan to Value Ratios (LVRs), loans expressed as a proportion of the value of a property, remain at a low level of 63.0%. Low LVRs also tend to reflect consumer caution.

First home buying levels continued to normalise to trend, with mortgage sales to this sector comprising 12.6% of all mortgages – the largest percentage since January 2010.

Download – October Mortgage Index – National

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