Average mortgage size and loan-to-valuation ratio fell in the June quarter, refinancing levels were up and first home buyer participation in the mortgage market was at its lowest level since 2017, aggregator AFG Financial Group reported in its latest quarterly update.
AFG brokers lodged A$22.5 billion in home loan applications in the June quarter – down 0.5 per cent on the same period last year. New South Wales recorded the biggest year-on-year fall – down 6.3 per cent.
AFG chief executive David Bailey said: “The canary in the coalmine may well be first home buyers, down to 11 per cent from 27 per cent in the September quarter last year. The central bank needs to be careful it doesn’t pull too hard on the interest rate lever.”
The average loan written by AFG brokers in the quarter was $610,662 – down from $615,668 in the March quarter and the peak of $624,077 in the December quarter.
The average LVR fell from 66.8 per cent to 65.4 per cent quarter-on-quarter – “the lowest we have seen”, AFG said.
Refinancing accounted for 29 per cent of activity, jumping from 24 per cent in the March quarter.
“Home buyers are on alert and contacting their brokers to counter rising rates,” Baily said.
Demand for fixed rate borrowing has collapsed as fixed rates have climbed sharply this year, falling from a peak of 38.2 per cent of loan type in the September quarter last year to 7.7 per cent in the June quarter.
Big bank (and subsidiary) share of AFG business picked up, rising from 50.8 per cent in the March quarter to 55.9 per cent in the June quarter. However, share has fallen from 59.3 per cent in the June quarter last year, when the big banks were using their cheap TFF funding to flog low priced fixed-rate loans.
ANZ, Commonwealth Bank, and Westpac increased share quarter-on-quarter, while NAB’s share fell.
Among other lenders AMP Bank, Auswide, Citibank, Newcastle Permanent, Suncorp and Teachers Mutual gained share, while Bank Australia, Great Southern Bank, HSBC, ING, Macquarie Bank, ME Bank, MyState and Resimac gained share.
Over the quarter, Macquarie’s share of AFG business fell from 11.3 per cent to 9.9 per cent and ING’s share fell from 3.9 per cent to 1.9 per cent.