AFG’s headline results for March are out and the speculator frenzy has hit an all time high in terms of the proportion of home loans:
Two in five new home loans last month were processed for investors according to AFG, Australia’s largest mortgage broker. AFG’s Mortgage Index shows that 39.6% of all mortgages processed in March were for investors – the highest such figure the company has recorded in the seven years it has been reporting mortgage data.
A total of 3,384 loans with a total value of $1.6 billion was processed for investors during March by AFG. The company has 11% of the total mortgage market in Australia (Source: AFG and ABS statistics) and while its figures are not definitive, they are strongly indicative of data published by the ABS six weeks later.
Investment activity varied from state to state. In NSW, investors accounted for 49% of all new home loans, in both Queensland and Victoria 37%, and in both South Australia and Western Australia 32%.
Mark Hewitt, General Manager of Sales and Operations says: ‘Investors have been driving the market for most of the past twelve months to the point that two in five of all new home loans in March were for investors. The vast majority of these are Mum and Dad investors taking advantage of the equity in their existing properties, and the low rate environment, to build their property portfolio. The fact that fixed rate loans are now less popular than they have been for most of the past year suggests that borrowers are also less concerned about the prospect of potential rate rises.’
Fixed rate loans comprised 23.9% of all mortgages processed in March, down from 25% in February and a peak of 30.7% in April 2013.
Loan to value ratios, the value of a home loan expressed as a proportion of the property value, remained steady at 68% nationally – the level is has held for much of the past year.
Total loans processed by AFG in March were $4,048 billion– the company’s second biggest month since last October, when it processed $4,057 billion.
It appears there’s been no slowing in mortgage demand in March taking into account the usual AFG market share caveats. The FHB share rose slightly but remains nowhere. Detailed state by state data will be out tonight and Leith will follow up with a detailed post tomorrow.
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.
