The AFG Morgtage Index is out for October and has fallen for the first time in several months, down 1.2% but still up 26% year on year:
A few more points of interest include investor’s share or mortgages falling slightly but first home buyers remaining unchanged and very low.
AFG itself makes a big deal of average loan size:
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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.’
Not in Sydney it isn’t. The only GFC lesson I can see there is that “property always goes up”. It will be interesting to see if the ABS figures show a comparable expansion in average loan size.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
