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Mortgage recession confirmed in June
by Lachlan Hibbert-Wells : Wednesday, July 02, 2008
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The national slowdown in mortgage sales continued during June, with the volume of mortgages sold by AFG, Australia’s largest mortgage broker, declining 9.2% on figures from May, and 22.0% compared to June 2007.
AFG sold 5939 mortgages in June 2008, totalling $2 billion in finance, compared with 8195 mortgages and $2.6 billion in finance in June 2007.
AFG Mortgage Index shows that mortgage sales nationally have now experienced two successive quarters of negative growth – the definition of an economic recession.
Also during the past year the average mortgage size has increased from $317k in June 2007 to $341k last month – a rise of 7.5%.
The biggest mortgage size increases have been in South Australia which rose by 13.5%, and in Queensland and New South Wales which were up 11.7% and 7.6% respectively.
Average mortgage sizes also grew by 6.1% in Victoria, 2.6% in South Australia, and held steady in Western Australia.
AFG’s general manager of sales and operations, Mark Hewitt, said “at first glance it may seem strange for an industry hit by rate rises to see average mortgage sizes increasing.”
“But what these figures show us is that many people who would normally be taking out smaller or medium size mortgages just can’t afford to.”
“The upper end of the market is proving the most resilient – i.e. buyers with significant equity in their homes or investment properties.”
AFG Mortgage Index also shows the proportion of buyers taking out fixed rate loans has fallen to 11.5% - the lowest figure in nearly three years.
Fixed rate loans peaked in November 2007 at 27.3% of all new home loans.
According to AFG, the vast majority of new buyers would now seem to think that the future of rates is steady or down, rather than up.
Refinancing through mortgage brokers continues at a relatively high rate of 36.5% of all new mortgages as property buyers continue to seek more competitive deals.
AFG is Australia’s biggest mortgage broker with 10% of the national market.
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