Signs of improvement for aggregators

The mortgage industry may be showing tentative signs of improvement with Australia's largest broker Australia Finance Group reporting sales in July 2008 were 17 per cent up on June.

The increase is unexpected, due to many banks and financial institutions slashing commission rates and emphasising more profitable branch sales, with some banks such as BankWest taking a step further and pulling mortgage products from the broker channel altogether - which they did last week with their popular Rate Tracker.
Total July sales for AFG were $2.4 billion, the highest in five months, with an average loan size of $341,000. This is more than $100,000 larger than the average loan written by all lenders based on ABS data, and suggests customers with larger loans (and perhaps investors) are taking the trouble to refinance.

Refinancing hit a record high of 41 per cent of all new mortgages, with fixed mortgages accounting for only eight per cent as borrowers moved to the standard variable which now makes up 45 per cent of new loans.

Adding support to the market improvement exhibited by AFG is Jennifer Nielsen, chief executive officer of the Loan Market Group, which has $13.5 billion in mortgages. Nielsen said June was stronger than expected with July marginally better than June.

Nielsen adds that while lodgements, approvals and settlements are up, refinancing is slowing and there is very little borrower interest in the fixed mortgage market.