New mortgages processed in September were for an average of $418,000, a leap of $17,000 from two months ago, but borrowers are not proportionally taking on any more debt according to AFG, Australia’s largest mortgage broker.
AFG’s latest Mortgage Index shows that the average LVR (Loan to Value Ratio - the value of a loan expressed as a proportion of the value of a property) has remained consistently around 68% since the start of the year. The growth in loan size but unchanged LVR reflects growing confidence in property among investors and other borrowers with higher equity levels. Average loan sizes varied widely from state to state. NSW has the highest average home loan of $507k, having broken through the half a million dollar mark in August. WA is next on $421k, with VIC on $397k, NT on $374k,QLD on $357k, and SA on $324k.Mark Hewitt, General Manager of Sales and Operations says:
‘What these figures show is that whilst borrowers are becoming more confident they haven’ t forgotten the lessons of over-gearing learned during the GFC. With the election now behind us and a sense of greater policy certainty, borrowers are responding to the combination of historically low rates, good affordability and rising property values with a strong, but sustainable momentum. Talk of property bubbles, including those driven by SMSFs, is overstated at this point.’
Across the nation, different states reflect very different characteristics. Almost half of all home loans processed in NSW were for investors, with only 4% for first home buyers. By contrast, in WA 25% of new loans were for first home buyers and 28% for investors. SA is seeing a rise in investors from 27% in July to 35% last month, while in Queensland there has been a gradual creeping back of first home buyers (7% of new home loans) after the withdrawal of first home buyers grants reduced their share to just 4.5%last December. AFG recorded another record-breaking month in September for mortgage volume, processing $3,624 million in home loans.
New mortgages processed in September were for an average of $418,000, a leap of $17,000 from two months ago, but borrowers are not proportionally taking on any more debt according to AFG, Australia’s largest mortgage broker.
The LVR has stayed the same whilst the loan size has risen.
That means higher prices being paid, or it could be that the quality of housing being bought has moved up the food chain.
Catweasel say it like watching a X Games. And mouse itself as high as the can go. More the air, more the crowd screams. Master watch on with deadpan & praise for mouse method. Sponsors making the pretty profits. And X Games big in a China.
New mortgages processed in September were for an average of $418,000, a leap of $17,000 from two months ago, but borrowers are not proportionally taking on any more debt according to AFG, Australia’s largest mortgage broker.
The LVR has stayed the same whilst the loan size has risen.
That means higher prices being paid, or it could be that the quality of housing being bought has moved up the food chain.
Sums up the problem with LVR based lending. The "V" can be a function of the "L".
New mortgages processed in September were for an average of $418,000, a leap of $17,000 from two months ago, but borrowers are not proportionally taking on any more debt according to AFG, Australia’s largest mortgage broker.
The LVR has stayed the same whilst the loan size has risen.
That means higher prices being paid, or it could be that the quality of housing being bought has moved up the food chain.
Sums up the problem with LVR based lending. The "V" can be a function of the "L".
That's true.
These figures are not seasonally adjusted. Nathan Webb used to prepare excellent seasonally adjusted charts for the AFG figures and what he found was that when adjusted for working days, the correlation with the later ABS and RPD data was very strong. There was a three month lag as I recall.
In August there were 22 working days whilst in September there were only 20.
Based on that 10% adjustment the figures for September would adjust to 9526 loans written for $3986M which is a very strong month indeed, and probably shows the strength of the market better than the raw figures.
October has 23 working days so if the volumes hold they might be 9959 loans for $4,167M based on a linear projection. That will make everyone sit up.
We will see how it goes.
Nathan if you're out there are you still keeping the charts?
Any expressed market opinion is my own and is not to be taken as financial advice
Based on that 10% adjustment the figures for September would adjust to 9526 loans written for $3986M which is a very strong month indeed, and probably shows the strength of the market better than the raw figures.
The numbers are very strong. Compare last September to this September and it's a massive jump.
But in typical Macrobusiness fashion, serial gloomster David Llewellyn-Smith reported it with the headline 'AFG Mortgage Index Falls!'.
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