AFG: Record mortgage size, but confidence "fragile"
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2/12/2009 1:00:00 PM
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AFG has warned that market "confidence is still fragile" despite the average new mortgage arranged in Australia reaching $367,000 in November, the highest on record
Mark Hewitt, GM of sales and operations at AFG, said larger average mortgages and greater activity by investors were usually the signs of a confident market.
"But confidence is still fragile. October and November are seasonally strong months in the calendar, but we've seen two straight months of decline," he said on the back of overall monthly sales of mortgages in November declined for the second month in a row.
The aggregator attributed this decline to increasing interest rates and sharply declining First Home Buyer numbers.
AFG joined the Housing Industry Association (HIA) and Real Estate Institute of Australia (REIA) in condemning yesterday's RBA cash rate rise.
"In our view the RBA has gone too far too fast in ratcheting rates back up again. Yesterday's unprecedented third monthly rise will do nothing to encourage ordinary families back into the property market," Hewitt said.
According to the benchmark AFG Mortgage Index mortgage sizes have been on the rise since the middle of the year, having increased by 6.4% since May.
Supporting recent reports of increasing property prices, average mortgage sizes have grown particularly strongly in Victoria - up 12.1% since May and NSW - up 10.7%, but less so in WA, where they rose by 3%. In Queensland they have held steady since May.
November also saw the continuing re-emergence of property investors, who accounted for one in three of all new mortgages arranged (33.8%), the highest such figure all year, and well up on the one in four (24.7%) figure for March when investment reached its lowest point.
First Home Buyers accounted for just 13.7% of all mortgages arranged in November, compared to 28.1% at their peak in March this year - an indication of just how false a bubble the government boost created.
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First home buyers drop in number - The gradual withdrawal of government incentives has resulted in a sharp fall in first home buyer
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