The size of an average mortgage increased by 5.9 per cent in the March quarter, according to aggregator AFG’s latest housing finance data.

AFG-affiliated brokers wrote 35,846 loans worth A$20.6 billion during the March quarter, with an average value of $574,948 – up from an average of $543,185 in the December quarter.

AFG chief executive David Bailey said the increase in loan size was a reflection of higher dwelling prices. However, rising house prices are outpacing the growth in loan sizes.

This is reflected in the fact that the average loan-to-valuation ratio for AFG loans fell from 73.3 per cent in the December quarter to 71.9 per cent in the March quarter.

Highly competitive fixed rates saw the proportion of fixed rate lending rise from 29.3 per cent in the December quarter to 34 per cent in the March quarter.

First home buyer activity fell from 22 per cent to 18 per cent, which is still well above AFG’s long-term average.

Bailey said: “State and federal government first home buyer incentive schemes have done their job and likely pulled forward some demand.”

Investor activity increased from 21 per cent to 23 per cent.