Volume and mix of home loans in transition
The volume of mortgages being written is edging up, and the percentage that are fixed rate loans is also on the rise, according to two of the nation's largest mortgage networks.Variable rates remain the most popular with Australian home loan borrowers, although fixed rate demand hit a four month high in September. According to the latest data from Mortgage Choice, fixed rates accounted for just over a quarter (25.5 per cent) of all loans written last month - up from 24.2 per cent the month before. Mortgage Choice spokesperson Jessica Darnbrough said the lift in fixed rate demand was expected as Australia's lenders have been quite aggressive in the fixed rate arena recently. "At the end of July and the beginning of August, many of Australia's lenders actively cut the interest on their suite of fixed rate products, which encouraged more borrowers to opt for a fixed rate mortgage," she said. "It usually takes a month or two for us to see any increase in demand for a particular product flow through the data, but we are definitely starting to see that now." Strong demand from investors drove the overall number of home loans processed to a record high in September, according to AFG, Australia's largest mortgage broker. Last month the company processed a total of A$4.3 billion in mortgages across the country, with just over 40 per cent processed on behalf of investors, and much more in NSW (just shy of half)Separate analysis conducted by AFG shows that the percentage of first-home buyer loans with a loan to value ratio above 90 per cent increased from 57 per cent of all FHB loans in 2012 to 64 per cent last month.During the same period, the proportion of investment loans with LVRs under 80 per cent declined from 46 per cent to 40 per cent. Strong overseas investor activity was likely to be contributing to these changes, AFG suggested.Concern, however, is for first-home buyers. Historically, this segment has comprised around 15 per cent of all loans processed, but in recent months this figure has fallen into single digits.