Rate uncertainty dampens mortgage sales
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4/05/2010 5:00:00 AM
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Mortgage sales plummeted 15.6% between March and April in response to rate rises and growing uncertainty of future increases.
The AFG Mortgage Index revealed that $2.3 bn of mortgages were arranged nationally in April, compared to $2.7 bn in March. Figures last month were 17.5% lower than the $2.8 bn arranged in April 2009.
NSW witnessed the greatest decline, recording a 19.9% drop from March sales. Qld figures fell 16.4%, SA fell 15.9%, WA fell 14% and Victoria fell a much more palatable 8.7%.
Meanwhile, AFG figures also indicate an emergence of a two-tier market as property investors continue to show interest. According to the aggregator, 36.9% of all mortgages arranged in April were for investors – the highest figure ever recorded by AFG. By comparison, first home buyers made up 10.2% of sales, while 16.3% were for up-graders. The remaining 36.6% were arranged for refinancing.
“Every month we go through this ‘will they or won’t they?’ raise interest rates debate,” said Mark Hewitt, general manager of sales and operations for AFG. “It’s hard for ordinary families to make the huge financial decision to buy a property when they don’t know what repayments will be in three months time, let alone next year. Investors are somewhat more insulated. They may have the option of rent rises or negative gearing to protect them. This is why we’re seeing the emergence of a two-tier mortgage market.”
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