Mortgage Index October 2013


New mortgages processed in September were for an average of $418,000 – a leap of $17,000 from two months ago, but borrowers are not proportionally taking on any more debt according to AFG, Australia’s largest mortgage broker. AFG’s latest Mortgage Index shows that the average LVR (Loan to Value Ratio – the value of a loan expressed as a proportion of the value of a property) has remained consistently around 68% since the start of the year. The growth in loan size but unchanged LVR reflects growing confidence in property among investors and other borrowers with higher equity levels.

Average loan sizes varied widely from state to state. NSW has the highest average home loan of $507k, having broken through the half a million dollar mark in August. WA is next on $421k, with VIC on $397k, NT on $374k, QLD on $357k, and SA on $324k.

Mark Hewitt, General Manager of Sales and Operations says: ‘What these figures show is that whilst borrowers are becoming more confident they haven’t forgotten the lessons of over-gearing learned during the GFC. With the election now behind us and a sense of greater policy certainty, borrowers are responding to the combination of historically low rates, good affordability and rising property values with a strong, but sustainable momentum. Talk of property bubbles, including those driven by SMSFs, is overstated at this point.’

Across the nation, different states reflect very different characteristics. Almost half of all home loans processed in NSW were for investors, with only 4% for first home buyers. By contrast, in WA 25% of new loans were for first home buyers and 28% for investors. SA is seeing a rise in investors from 27% in July to 35% last month, while in Queensland there has been a gradual creeping back of first home buyers (7% of new home loans) after the withdrawal of first home buyers grants reduced their share to just 4.5% last December.

AFG recorded another record-breaking month in September for mortgage volume, processing $3,624 million in home loans.

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