AFG numbers back on trend

The headline-grabbing drop in home loan sales reported by AFG Australia in January, which indicated a worrying decline in the mortgage market, was looking more like an anomaly yesterday, after the group reported a sales recovery in February.

The A$1.3 billion of mortgages the group's brokers wrote in January was 40 per cent below the average monthly figure for 2010.

Sales in February were $2.05 billion - a little below the December figure of $2.07 billion. Ignoring the January figure, AFG's figures show a 9.7 per cent decline over the past year.

The bottom is not falling out of the market, although the trend indicates further weakening.

One data-point that may worry lenders is the proportion of borrowers refinancing. Thirty-seven per cent of loans sold by AFG brokers in February were for refinance, compared with 36 per cent in January and 42 per cent in December.

What this suggests is that the offers being made over the past month to entice borrowers are having little impact, but it might be too early to make that call.