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Mortgage sales surge

Demand for new and refinanced home loans surged in May, mortgage broker AFG announced this week.

AFG’s monthly Mortgage Index showed that the broker processed over $3.6 billion in mortgages last month - an increase of nearly 13 per cent from an already record-breaking April figure of $3.2 billion.

Demand rose strongly in Western Australia, where the number of mortgages processed increased by 17.7 per cent over April’s result, followed by Victoria (up 14.6 per cent), NSW (10.9 per cent), SA (8.6 per cent) and QLD (7.2 per cent).

Demand rose consistently across all buyer types, from first home buyers to investors and borrowers looking to refinance.

There was also a larger share of upgraders, who comprised 15.9 per cent of all mortgage sales last month compared to 11.3 per cent in May 2012.

Mark Hewitt, General Manager of Sales and Operations said the company has seen a marked increase in borrowing activity since February.

“Borrowers of all types were encouraged by the further rate reduction in early May and the expectation that we're in a low rate environment for some time to come”, Mark Hewitt said.

“Reassuringly, the recent growth looks sustainable and we are not seeing the normal characteristics of a boom.

“The average new loan size is the same as it was over a year ago, LVRs (loan-to-value ratios) are consistent and in New South Wales and Queensland, first home buying activity is running at about a third of the long term average.”

Demand for fixed rate loans fell slightly from an all-time high in April, comprising 28.5 per cent of all new mortgages, compared to 30.7 per cent the month before.

Non-major lenders gained some market share during the month especially among borrowers seeking refinance where they comprised 27.1 per cent of the market (up from 25.4 per cent the month before) and among first home buyers - 25.7 per cent compared to 24.8 per cent in April.