One of the country's leading mortgage industry indicators shows that demand for mortgage finance slid further in the March quarter across all states and territories except for Victoria.The latest AFG Mortgage Index, which tracks mortgage volumes generated through the aggregator's national broking platform, found that the number of home loan applications lodged by brokers fell by 4.2 per cent during the three-month period.AFG brokers submitted 27,767 loan applications on behalf of borrowers in the March quarter compared to 28,994 for the same period last year.The aggregate value of mortgage finance also declined, but only by 1.78 per cent to A$13.87 billion.That was because the average size of loan applications climbed by 2.5 per cent or $12,500 to $499,608.A clear trend is now apparent, with the AFG data showing home loan activity across its broking network peaked in the September quarter of 2016 when clients applied for 31, 571 mortgages valued at $15.12 billion.AFG attributes the sustained decline in activity to regulatory interventions by the Australian Prudential Regulation Authority, which it said was "potentially stifling growth" in the mortgage industry."Given the timing of public holidays and suggestions that Sydney house prices are coming off a little, the fact that there does not seem to be any growth is not surprising," said AFG chief executive, David Bailey."The only market in the country which appears to be generating ongoing growth is Victoria."Victorian borrowers lodged loan applications worth $4.58 billion through AFG brokers, up $346 million on the corresponding period in 2017.If the present trend continues, Victoria could eclipse NSW as the country's leading state market for home loan originations by the middle of this year.The total value of mortgage applications submitted by AFG's NSW brokers fell $250 million to $4.8 billion for the quarter.Bailey said indications in January of a recovery in the WA mortgage market had dissipated by the end of March."Western Australia, whilst initially showing signs of some green shoots earlier in the quarter appears to have softened," he said."First home buyers are a known stimulant for an economy, so we hope that the recently announced increased GST allocation to WA will be used in part to stimulate this sector."Mortgage originations generated through AFG's WA brokers peaked in the September quarter of 2015 when clients applied for loans worth $2.48 billion.Brokers submitted loan applications worth only $1.5 billion in the three months to the end of March.This was the slowest quarter recorded by WA brokers in WA since in more than five years.According to AFG, brokers are continuing to direct an increasing proportion of borrowers to rivals of the major banks.AFG brokers directed 36.7 per cent of loan applications to non-majors in the quarter, which was up from 32.8 per cent in the corresponding period last year.The index also detected subtle shifts in the types of loans that borrowers applied for during the quarter, with increases in demand for standard variable and introductory rate mortgages.Demand for fixed rate and equity loans declined.