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SURPRISE RECOVERY IN SEPTEMBER– LATEST MORTGAGE FIGURES
2 October 2008 Despite turmoil on financial markets during September, sales of mortgages across Australia recovered by 10.2% on the previous month’s low figure, according to AFG, Australia’s largest mortgage broker. AFG Mortgage Index shows that the states benefiting most from the recovery were Queensland, where mortgage sales increased by 17.9% and New South Wales which saw a 16.1% month on month growth. Western Australia and Victoria saw sales lift by 5.9% and 4.2% respectively. The recovery can be partly attributed to August buyers holding off till September to confirm the first rate movement downwards, which had been the source of speculation for weeks. While September sales were lower than for the same month last year by 13.9%, this is a less worrying figure than for August, which saw sales decline by 37% on August 2007. Malcolm Watkins, Executive Director of AFG says: “We’d like to see two things happen to shore up this bounce. The first would be for the RBA to pass on a 0.5% rate cut next week. “The second is for more initiatives like the recent $4bn investment by the RBA in AAArated Residential Mortgage-Backed Securities. Whilst it’s a good start to alleviate liquidity, the $4bn is less than two month’s worth of mortgage sales by our company – and we’re only one of many participants. “It’s critical that the funding arm is available to smaller lenders, including non-bank lenders and building societies, whose ability to participate has been clamped off due to spiralling funding costs. This will encourage a wider choice of home loans and exert pressure on the majors to pass on more of any future rates cuts. Lack of competition ultimately means consumers will suffer at the expense of shareholders.” AFG Mortgage Index shows that through all the volatility of the past 12 months, average mortgage sizes and Loan to Value ratios have hardly changed. On a national basis, the average new mortgage size is $337k, compared to $329k in September 2007 – a 2.4% increase. Mortgage sizes grew most in South Australia (by 8.3% from $253k to $274k) and New South Wales (by 4.7% from $382k to $400k), but held steady in most other states. Meanwhile Loan to Value Ratios (LVRs), the value of a new loan expressed as a proportion of the value of a house, have also held steady – from 66.3% in September 2007 to 65.9% in September 2008. This suggests that most new buyers are not overstretching themselves to buy property. LVRs fell in Queensland, South Australia and Victoria but increased in WA by 10.9% and NSW by 4.3%.
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Fixed rate mortgages remained at their all time low of 4.9% of all new mortgages sold, suggesting that most buyers do not expect global liquidity problems to result in higher mortgage rates. Figures for each state are available at: www.afgonline.com.au under News. ENDS PLEASE SEE TABLES OVERLEAF CONTACT DETAILS: Malcolm Watkins, Executive Director Australian Finance Group Ltd David Michie: Mosaic Reputation Management
Tel 03 9820 4800 Mob 0411 453 404
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AFG - First with the Figures
AFG MORTGAGES SOLD TABLE 1: ALL AUSTRALIA
MONTH Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 June 08 July 08 Aug 08 Sep 08
TOTAL NUMBER 9,412 7,412 8,797 8,221 6,125 6,471 7,574 6,498 7,125 6,691 5,939 6,935 5,770 6,231
TOTAL AMOUNT $3,030 m $2,442 m $2,840 m $2,742 m $1,999 m $2,056 m $2,438 m $2,120 m $2,247 m $2,233 m $2,026 m $2,370 m $1,908 m $2,102 m
AVERAGE SIZE $321k $329k $322k $333k $326k $317k $321k $326k $315k $333k $341k $341k $330k $337k
PROPERTY INVESTORS 32.3% 32.9% 31.0% 32.5% 33.9% 30.8% 29.0% 31.4% 33.2% 32.8% 32.2% 29.9% 30.05% 31.37%
% REFINANCE 32.98% 34.65% 36.24% 36.43% 35.24% 37.04% 38.42% 39.34% 35.9% 36.1% 36.5% 40.78% 37.9% 39.1%
AVERAGE MORTGAGE SIZE IN DOLLARS TABLE 2: STATE BY STATE
MONTH 2007 08 2007 09 2007 10 2007 11 2007 12 2008 01 2008 02 2008 03 2008 04 2008 05 2008 06 2008 07 2008 08 2008 09
AUSTRALIA 321,945 329,489 322,922 333,544 326,413 317,829 321,955 326,375 315,412 333,876 341,243 341,883 330,805 337,384
NSW 380,922 382,790 388,739 390,076 377,299 379,064 370,972 374,254 391,160 386,697 403,784 417,551 367,730 400,879
QLD 303,562 318,840 308,928 317,168 315,673 296,852 313,930 307,171 291,649 317,693 324,589 310,818 324,762 321,878
SA 255,750 253,900 260,834 258,437 250,111 249,645 257,830 257,040 229,878 269,311 281,035 273,698 271,336 274,764
VIC 289,476 304,950 290,875 308,500 302,884 296,231 297,196 325,928 297,749 287,271 305,943 313,487 302,636 298,972
WA 365,340 369,965 351,450 370,068 354,297 361,675 346,328 351,209 349,503 386,305 369,636 372,227 363,039 369,002
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LOAN VALUE RATIOS (Loan stated as % of property value) TABLE 3: STATE BY STATE AVERAGE M AVERAGE
2007 04 2007 05 2007 06 2007 07 2007 08 2007 09 2007 10 2007 11 2007 12 2008 01 2008 02 2008 03 2008 04 2008 05 2008 06 2008 07 2008 08 2008 09 AUSTRALIA 66.7% 66.4% 65.8% 67.7% 66.4% 66.3% 65.9% 65.2% 62.8% 62.7% 64.5% 64.8% 65.5% 65.7% 64.9% 66.4% 66.7% 65.9% NSW 67.7% 69.4% 70.8% 72.9% 70.3% 67.6% 69.4% 68.3% 67.8% 61.7% 68.5% 69.4% 72.0% 68.5% 70.0% 69.2% 71.5% 70.5% QLD 67.8% 66.9% 68.1% 67.8% 67.7% 69.7% 66.8% 66.7% 63.7% 64.5% 64.6% 66.5% 64.3% 64.8% 66.5% 65.1% 64.2% 66.4% SA 69.4% 67.9% 66.8% 68.5% 68.8% 68.1% 66.9% 65.3% 64.3% 65.0% 65.8% 64.2% 63.6% 65.1% 64.1% 67.5% 68.0% 63.0% VIC 73.0% 71.2% 68.5% 71.4% 70.1% 70.3% 67.0% 70.6% 68.1% 68.8% 69.8% 69.6% 71.9% 70.9% 69.9% 69.9% 69.3% 67.3% WA 55.4% 56.8% 55.1% 57.6% 55.3% 56.0% 59.4% 54.9% 49.9% 53.2% 53.6% 54.4% 55.5% 59.2% 54.1% 60.1% 60.2% 62.1%
LOAN TYPES TABLE 4: ALL AUSTRALIA AVERAGE
MONTH Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 June 08 July 08 Aug 08 Sep 08 BASIC VARIABLE 19.5% 19.3% 19.1% 18.6% 18.9% 18.8% 17.3% 16.9% 18.5% 18.2% 19.5% 19.0% 21.9% 21.1% EQUITY 14.8% 14.9% 14.7% 13.7% 14.2% 14.3% 14.3% 15.2% 14.5% 15.2% 15.5% 14.6% 15.6% 14.7% FIXED 18.3% 20.4% 23.2% 27.3% 23.3% 24.3% 25.3% 24.0% 18.4% 13.7% 11.5% 7.9% 4.9% 4.9% INTRO 5.9% 5.9% 5.1% 5.3% 4.7% 5.8% 5.0% 5.3% 9.5% 12.8% 12.7% 13.7% 8.7% 8.9% STANDARD VARIABLE 41.2% 38.8% 37.6% 34.9% 38.8% 35.3% 35.6% 38.5% 39.1% 39.9% 40.8% 44.8% 48.9% 50.3%
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DEFINITIONS: 1. Standard Variable: includes the full range of features available. 2. Basic Variable: without some features, lower fees and rates. 3. Intro: also known as ‘honeymoon’ where the borrower is offered a very cheap initial rate (fixed or variable) before the loan reverts to a Standard Variable. 4. Fixed: interest rate is fixed for a nominated period before it reverts to a Standard Variable. 5. Equity: also known as ‘line of credit’ allows the borrower to draw out money up to a specified limit. Generally more expensive than Standard Variable loans.
Note to Editors AFG is Australia’s largest wholesaler of mortgage finance. Established in 1994, the company now provides more than 20% of brokers nationwide with access to Australia’s leading lending institutions, and has a mortgage book in excess of $50 billion.
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