New mortgages processed by the country’s largest broking group, AFG, reached an average of $418,000 – or $17,000 higher than two months prior – in September, but borrowers are not proportionately taking on any more debt.
AFG’s latest Mortgage Index shows that the average LVR has remained consistently around 68% since the start of the year. The growth in loan size but unchanged LVR, according to the group, reflects growing confidence in property among investors and other borrowers with higher equity levels.
“What these figures show is that whilst borrowers are becoming more confident, they haven’t forgotten the lessons of over-gearing learned during the GFC,” says Mark Hewitt, general manager of sales and operations at AFG.
“With the election now behind us and a sense of greater policy certainty, borrowers are responding to the combination of historically low rates, good affordability and rising property values with a strong but sustainable momentum. Talk of property bubbles, including those driven by SMSFs, is overstated at this point.”
Across the nation, different states reflect very different characteristics. Almost half of all home loans processed in NSW were for investors, with only 4% for first home buyers. By contrast, in WA, 25% of new loans were for first home buyers and 28% for investors. SA saw a rise in investors from 27% in July to 35% last month, while in Queensland there has been a gradual creeping back of first home buyers (7% of new home loans) after the withdrawal of first home buyers grants reduced their share to just 4.5% last December.
Average loan sizes also varied widely from state to state. NSW had the highest average home loan of $507,000, having broken through the half a million dollar mark in August. WA was next at $421,000, with VIC at $397,000, NT at $374,000, QLD at $357,000 and SA at $324,000.
AFG recorded another record-breaking month in September for mortgage volume, processing $3.624 million in home loans.