HIGHEST FEBRUARY MORTGAGE SALES ON RECORD AS FIXED RATE LOANS PEAK
Average new home loan reaches $400k for first time ever
AFG, Australia's largest mortgage broker, had its highest February sales on record, processing $2.8 billion of loans. This compares to $2.0 bn in February 2011 and $2.2 bn in February 2010. In a month when lenders decoupled from the RBA cash rate, announcing out of cycle rate rises, more new borrowers than ever before ? 23.2% - chose Fixed rate loans. This surpasses the previous high of 20.4% for fixed rate loans recorded in October last year, and compares to a figure of just 6.6% in February 2011.AFG Mortgage Index also shows that, for the first time ever, the average new home loan in Australia reached $400k - up from $385k in January and $382k in February 2011. Across the nation, NSW had the highest average new home loan - $471k, followed by WA - $421k and VIC - $409k, which has only recently broken through the $400k barrier.
HIGHEST FEBRUARY MORTGAGE SALES ON RECORD AS FIXED RATE LOANS PEAK
Average new home loan reaches $400k for first time ever
AFG, Australia's largest mortgage broker, had its highest February sales on record, processing $2.8 billion of loans. This compares to $2.0 bn in February 2011 and $2.2 bn in February 2010. In a month when lenders decoupled from the RBA cash rate, announcing out of cycle rate rises, more new borrowers than ever before ? 23.2% - chose Fixed rate loans. This surpasses the previous high of 20.4% for fixed rate loans recorded in October last year, and compares to a figure of just 6.6% in February 2011.AFG Mortgage Index also shows that, for the first time ever, the average new home loan in Australia reached $400k - up from $385k in January and $382k in February 2011. Across the nation, NSW had the highest average new home loan - $471k, followed by WA - $421k and VIC - $409k, which has only recently broken through the $400k barrier.
Way way up on 2011 (5365) and even way up on the 2010 (6294) figures.
Actually according to my records February 2009 was bigger with 7673 sales, but I don't have the value of sales on record, so perhaps that is bigger.
It is way above most expectations - perhaps the extra day for leap year?
That sure does look like a kick in the jewels for us bears though - that is a solid result!!
I'm not sure that it will last all that long - weren't most of those contracts to buy signed in January, before the RBA stopped cutting and before the banks announced that the RBA was no longer relevent to their interest rate decisions.
Lucky for me the worst that can happen is that I might be wrong. For others, it could mean a lifetime of the sort of huge debt I have been lucky enough to avoid while still having aroof overhead.
We are 24 years into the bubble (1988 is Keen's latest re-revised start date of the bubble). Prices always go up and mortgage lending always goes up at the 24th year mark. There's always a bull trap at exactly 24 years and 2 months into the bubble. This bubble is no different - its like all other bubbles. History has shown all this to be true. These February house price and credit rises are certain confirmation that the crash is now about to take place. It is now certain that the crash will take place next Tuesday - or sometime later. Those of you who sold to rent in 1988 because of the bubble are about to be vindicated on Tuesday - or later.
69% of home loans offering LVR 95% and higher Lowest number of home buyers in over a decade But borrowers need to be careful: bigger mortgage means greater risk
More doors could be open for potential home owners this year but borrowers are being urged to be cautious of taking on bigger mortgages, following a new study into lending criteria by Australia’s best financial comparison website RateCity.com.au. RateCity analysed the loan-to-value ratios (LVR) of home loans in its extensive database, and found that there are now nearly 70 percent with LVRs of 95 percent and above. This compares to about 50 percent two years ago.
LVR is the proportion of loan as a percentage of the value of a property that a lender is willing to offer. If, for example, a lender offers a home loan with an LVR of 90 percent, then for a property valued at $500,000, the borrower must have a deposit of at least $50,000. Damian Smith, RateCity’s CEO, said it’s the first time in more than three years that this proportion of home loans offered Australians borrowing power of 95 percent and higher of the value of a property.
“In early 2008, there were quite a few loans – 21 percent in fact – that didn’t require any deposit at all. The Global Financial Crisis saw lenders really tighten their belts on mortgage criteria by requiring much larger deposits – so almost all of these high LVR home loans disappeared.
“After a couple of years of really tight lending criteria, things are starting to loosen up again. While there are still no home loans in our database with 100 percent LVR, many lenders are taking on more risk than they have in the past three years by offering higher LVRs.”
Mr Smith said many lenders have loosened their lending criteria to encourage growth in a slow mortgage market.
“Last year the Australian Bureau of Statistics (ABS) recorded 536,511 home loans financed in 2011. While that’s slight growth (11,000 more borrowers) than 2010, it’s still the second lowest total number of home loans financed since the year 2000.
“One of the biggest barriers for potential home buyers is saving for a deposit and the easiest way to encourage more buyers is by offering borrowers bigger loans with smaller deposits,” said Mr Smith.
Three of the four major banks changed LVRs on some of their home loans this month, and now offer 95 percent while ANZ continues to offer 90 percent. While higher LVR loans can help get additional activity in the home buying market, Mr Smith said that borrowers needed to be cautious about entering the market with a low deposit.
“Borrowers need to cautious – a smaller deposit always brings greater risk. You owe a larger amount, so increases in interest rates affect you more, and you face greater risk if there’s a reduction in your income.
“While higher LVR loans can suit some borrowers – especially those who are confident about income growth, most would be better off saving for a bigger deposit. It might delay home ownership, but over the next 20 years will almost certainly put you in a financial position,” said Mr Smith.
We are 24 years into the bubble (1988 is Keen's latest re-revised start date of the bubble). Prices always go up and mortgage lending always goes up at the 24th year mark. There's always a bull trap at exactly 24 years and 2 months into the bubble. This bubble is no different - its like all other bubbles. History has shown all this to be true. These February house price and credit rises are certain confirmation that the crash is now about to take place. It is now certain that the crash will take place next Tuesday - or sometime later. Those of you who sold to rent in 1988 because of the bubble are about to be vindicated on Tuesday - or later.
Oh don't be silly - everybody knows that while a single month's negative data doesn't mean a thing, a single month's positive data OTOH always signals the beginning of a roaring new boom :cool:
“In early 2008, there were quite a few loans – 21 percent in fact – that didn’t require any deposit at all. The Global Financial Crisis saw lenders really tighten their belts on mortgage criteria by requiring much larger deposits – so almost all of these high LVR home loans disappeared.
“After a couple of years of really tight lending criteria, things are starting to loosen up again. While there are still no home loans in our database with 100 percent LVR, many lenders are taking on more risk than they have in the past three years by offering higher LVRs.”
Mr Smith said many lenders have loosened their lending criteria to encourage growth in a slow mortgage market.
So the lenders relax credit and dive back into risky pre-GFC lending habits in their desperation to pump up the bubble, and not surprisingly the result is a huge surge in mortgage numbers. No subprime here folks, what could possibly go wrong? :blink:
Mortgage lending remains in the doldrums, managing only growth of only 0.5% in January to be up 5.3% over the past year, according to new credit figures released by the RBA.
The 5.3% annual growth in mortgages is the lowest level since the RBA began keeping records in August 1977.
Owner-occupier housing credit rose by 0.5% in January to stand 5.7% higher than a year ago (also the lowest since records were kept dating back to January 1991) while investor housing finance lifted 0.4% in January to be up 4.7% over the year (a three-year low).
The latest figures show that the non-bank sector (including building societies and credit unions) continue to lose ground to the banking sector in mortgage lending despite their best efforts to encourage borrowers to consider switching to an alternative smaller lender.
The cumulative non-bank mortgage book shrunk by $500 million over January, from $156.6 billion to $156.1 billion.
In comparison, the banking sector increased its cumulative mortgage book by $4.1 billion fr0m $1.682 trillion to $1.686 trillion, with the major banks accounting for $1.361 trillion (81%).
The RBA figures show that personal credit fell by 0.2% over the month to be down 1.3% over the year just, close to the biggest decline in over two years.
Business credit also fell by 0.2% in January after a 0.3% rise in December. Business credit is 1.4% higher than a year ago.
AFG mortgage brokers broke in-house records in February, processing a 7,000 loans with a cumulative value $2.8 billion. This was a 40% increase on the 5,365 loans totalling $2 billion processed in January 2011 and 28% higher than the $2.2 billion processed in February 2010.
The numbers are fairly astonishing given that mortgage lending grew by just 0.5% in January, according to official RBA figures, with annual growth at just over 5%, the lowest figure in the 35 years of record keeping by the RBA.
In a month when lenders decoupled from the RBA cash rate, announcing out-of-cycle rate rises, more new borrowers than ever before – 23.2% –chose fixed-rate loans, surpassing the previous high of 20.4% for fixed-rate loans recorded in October last year and triple the February 2011 fixed-rate percentage of 6.6%.
In another first for AFG, the average new home loan in Australia reached $400,000 – up from $385,000 in January and $382,000 in February 2011.
Across the nation, NSW had the highest average new home loan – $471,000, followed by WA at $421,000 and Victoria at $409,000.
“The dynamics of the home loan market are changing in a number of ways. The very good news is that the past six months has seen a steady stream of First Home Buyers return, which is vital to the future of property markets,” says Mark Hewitt, general manager of sales and operations at AFG.
“As well as this, increasing competition among major and non-major lenders, and the decoupling of lender rate announcements from the RBA is making the mortgage market a more complex place.
“This is an environment in which brokers thrive, because borrowers know they really need to shop around for the best deal, and increasingly rely on us to do so. Concern about the future of rates is also the reason why record numbers of borrowers are choosing to fix rates."
During February, major lenders’ share of new AFG mortgage lending dropped from 79% to 76.1%.
Most of this change was because of an increasing trend among first home buyers to opt for non-major lenders – up from 27.4% in January to 29.1% in February.
Following the out-of-cycle rate rise by banks last month, more new borrowers chose fixed rate loans, according to the Australian Finance Group (AFG) Mortgage Index.
AFG reported that more new borrowers than ever before – 23.2 per cent – chose to fix rates, surpassing the previous 20.4 per cent for fixed rate loans recorded in October last year, and just 6.6 per cent in February 2011.
Also reported in the AFG Mortgage Index was the record high average new home loan in Australia at $400,000 last month, up from $385,000 in January and $382,000 in February 2011.
New South Wales led the nation with the highest average new home loan for February at $471,000, while Western Australia followed with an average of $421,000 and Victoria took third place with $409,000.
AFG general manager of sales and operations Mark Hewitt said the dynamics of the home loan market are changing in many ways, including the return of a “steady stream” of first homebuyers over the past six months.
Also changing is the Big Four lenders’ dominance in the mortgage market, with more borrowers shopping around for the best fixed-rate deal, possibly in reaction to the out-of-cycle behaviour of the major lenders last month and borrowers’ concerns about the future direction of interest rates, said Hewitt.
The major lenders’ market share dropped from 79 per cent in January down to 76.1 per cent in February, Hewitt said.
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