Major mortgage aggregator AFG processed a record $4.2 billion in mortgages last month, which it attributed to continued low interest rates and the increasing use of brokers.
The $4.2 billion figure is 17% higher than for May 2013, and 4% above AFG’s previous record volume of $4 billion in October 2013.
AFG director Kevin Matthews
said despite the fall in consumer confidence caused by the recent federal budget, low and stable interest rates are a key factor in encouraging borrowers to participate in the real estate market.
“Recent independent research shows that one in two borrowers are now using mortgage brokers, which no doubt also contributed to our record result,” he said.
The financial services company said it processed two out of every five new home loans for investors last month, at a time when investment mortgages make up 40% of all new home loans.
Investment volumes in NSW were the highest in the country last month at 49%. Investor demand accounted for 40% of all new home loans in Victoria – the highest figure recorded by AFG in this state.
Queensland has also seen a steady rise in investor activity during the past three months from 32% of all new home loans in February to 39% in May.
Investor activity accounted for 34% of mortgage volumes in South Australia and 31% in Western Australia last month.
First home buyer activity across the country held steady at 10%, although there is a wide disparity between states where grants are provided for first home buyers, such as WA, where they make up 22% of all new home loans, and states where there are no grants, such as NSW, where first home buyers make up just 3.5%.
Non-major lenders recaptured some of the gains made by major lenders last month, taking 25% of all new home loans, AFG said.
Most of these gains were in the first home buyer market where the share of non-major lenders rose to 30%.
AFG, which recently celebrated 20 years in business, has around 2000 brokers and accounts for 11.4% of the Australian residential mortgage market.
Its loan book is worth more than $90 billion.