State breaks new records for investor activity - but why?

by AB04 Sep 2013

Almost half (49.5%) of all home loans processed by mortgage broker AFG in New South Wales last month were for investors – the highest level of investor activity the company has ever recorded for any state.

Furthermore, investor participation was unusually high in other states as well, comprising 36.7% of new home loans processed in Victoria, 35.8% in Queensland, 32.9% in South Australia and 28.4% in Western Australia.

AFG general manager of sales and operations, Mark Hewitt, says that part of the reason behind New South Wales’ record-breaking figure is that two thirds of first home buyers exited the market following the withdrawal of buyers’ grants.

“With property prices starting to rise and rates set to remain low for a while yet, a lot of investors are anticipating the next property cycle,” says Heweitt. “A decisive result from next weekend’s election will almost certainly support the return of broader-based confidence across the country.”

August was a bumper month for AFG, which processed $3.613 billion in finance – slightly more than the record-breaking figure of $3.608 billion recorded in May this year.

Along with unprecedented levels of investor interest, NSW saw the average mortgage size break through the $500k barrier for the first time ($505k). This figure compares with average new home loans of $434k in NT, $405k in WA, $386k in VIC, $352k in QLD and $319k in SA.

Enthusiasm for fixed home loans fell for the fourth month in a row – comprising 26.1% of all new home loans. While below the 30.7% high water mark of April this year, this figure is still relatively high, suggesting that many borrowers are locking in part or all of their loans in anticipation of the rate cycle turning.