AFG, Australia's largest mortgage broker, processed over $3.6 billion in mortgages last month - an increase of nearly 13% from an already record-breaking April figure of $3.2 billion.
Demand for mortgages rose most strongly in WA, where mortgages processed increased by 17.7% over April, followed by Victoria (+14.6%), NSW (+10.9%), SA (+8.6%) and QLD (+7.2%).
Demand rose consistently across all buyer types, including first home buyers, investors and borrowers looking to refinance. But compared to May 2012, there was a larger share of up-graders, who comprised 15.9% of all mortgage sales last month, compared to 11.3% in May 2012.
Mark Hewitt, general manager of sales and operations, says AFG has seen a ‘marked increase’ in borrowing activity since February.
“Borrowers of all types were encouraged by the further rate reduction in early May and the expectation that we're in a low rate environment for some time to come. Reassuringly, the recent growth looks sustainable and we are not seeing the normal characteristics of a boom. The average new loan size is the same as it was over a year ago, LVRs are consistent and in New South Wales and Queensland, first home buying activity is running at about a third of the long-term average.”
Demand for fixed rate loans fell slightly from an all-time high in April, comprising 28.5% of all new mortgages, compared to 30.7% the month before.
Non-major lenders gained some market share during the month, especially among borrowers seeking refinance, where they comprised 27.1% of the market (up from 25.4% the month before) and among first home buyers - 25.7% compared to 24.8% in April.