The average loan-to-valuation ratio of loans written by Australian Finance Group brokers during the June quarter was 65.3 per cent – the lowest LVR ever reported in the AFG Mortgage Index, which goes back to 2013.
The record low LVR reflects the high proportion of refinancing in the current mortgage market, tighter lending standards and a more conservative approach by borrowers.
After two quarters of falling lodgements, AFG reported a 14.9 per cent increase in the June quarter, when its brokers wrote 37,270 mortgage applications worth A$22.4 billion.
The average LVR fell from 65.7 per cent in the March quarter to 65.3 per cent in the June quarter. The recent peak was an average LVR of 73.5 per cent in the December quarter 2021.
Refinance accounted for 33 per cent of the value of lodgements – up from 31 per cent in the March quarter and 29 per cent in the previous corresponding period.
The average loan size rose from $598,258 in the March quarter to $602,028 in the June quarter.
The major banks and their subsidiary brands accounted for 60.4 per cent of AFG’s total business during the quarter, down from 61.8 per cent in the March quarter.
AFG chief executive David Bailey said the position of the major banks was still very strong. He said the September quarter data would show what impact the recent withdrawal of cashback offers by the bigger lenders would have on competition.
“It is pleasing to see cashback offers largely being removed from the market,” Bailey said.