The conversion rate of home loan applications to settlements has seen a decline, indicating that serviceability challenges are, or were, taking a toll on prospective homebuyers seeking finance.

New data from the Mortgage Finance Association of Australia shows vonversion rates recorded a second consecutive six-month period of decline, experiencing a 9.2 percentage point dip year-on-year and falling below 80 per cent for the first time since 2021.

“While overall home loan applications are up across most of the country, we hear consistently from our members that serviceability has been a challenge for their clients as they adjust to current interest rate levels," MFAA CEO Anna Pannek explained.

"The downward shift in conversion rates highlights this it's harder to get deals through, with much more work required on the part of mortgage brokers to find the right solution for their clients,” Pannek said.

Settlement values for mortgage broker originated home loans surpassed $300 billion for a 12-month period for the second time, at $351 billion to September 2023.

Seven out of ten home loans were written by brokers during the last six-months, with thr September 2023 quarter recording a 71.5% market share.