Australian Finance Group (AFG) has announced its record-breaking quarter for home finance lodgements, hitting $19.9bn during the second quarter of financial year 2021.
The total housing finance lodged by AFG brokers went up by 9.5% on a quarterly basis and 30% from the preceding year. The average loan size has hit a new record-level, coming in at $544,359 over the quarter.
These strong gains indicate the increased activity from homeowners and would-be buyers amid the impacts of the COVID-19 pandemic.
"With travel off the agenda for many, the home has become even more important and 42% of lodgements were for those upgrading their homes," said David Bailey, CEO of AFG.
Home finance lodgements grew across most states, with Victoria reporting the largest increase at 18%, followed by Western Australia (13.3%), Queensland (7.8%), New South Wales (3.5), and South Australia (0.4%).
According to AFG's report, government incentives geared towards first-home buyers have boosted the share of loans toward the segment to 22%.
"A record-high loan-to-value ratio of 73% is due to the high proportion of first-home buyers who typically have smaller deposits," Bailey said.
On the other hand, the share of investor finance remained at an all-time low of 21%.
During the quarter, the proportion of borrowers taking out a fixed-rate loan remained elevated at 29.2%. This could indicate that the awareness of the market about the likelihood of rates bottoming out.
The low-rate environment has also provided an opportunity for borrowers to pay their debt faster, with around 88% choosing a principal and interest loan over an interest-only mortgage.
In terms of choice of finance provider, smaller lenders maintained their 41% share. The big four banks were able to leverage their funding advantage through very competitive pricing and cash back offers.