New mortgage’s average value increased in record numbers in November because of the increase of property values and the resurgence of investors.
Despite that, the latest Australian Finance Group mortgage index reflects that home loan purchases went down for a second straight month due to the declining first home buyer activity and higher interest rates.
The average home loan value is now at $367,000. This 6.4 per cent increase proved to be the biggest hike since May 2009.
Among all states, Victoria has the highest mortgage value growth with 12.1 per cent. At second is NSW with 10.7 per cent while Western Australia’s mortgages rose three per cent. Average new mortgages in Queensland stayed the same.
Though there is an increase, AFG Sales and Operations General Manager Mark Hewitt claimed that confidence on home loans is still unstable.
Hewitt stated that though higher mortgages rates correspond to higher consumer confidence, home loan sales transactions in October and November went down. He also added that the recent interest rate hike by the Reserve Bank of Australia might have negative implications to possible mortgage customers for it can take out confidence with home loan deals.
November’s home loan transactions totaled 6,541. This is 8.36 per cent lower than October’s numbers. And while 13.7 per cent of the new loans were by first home buyers, it still is 14.4 per cent lower than the peak rate of March 2009.
Though there is a decline on the consumer end, property investors own a year-high 33.8 per cent of the new mortgages filed in November. The previous high was March’s 24.7 per cent.
Also, AFG pointed out that non-bank lending went up to 11.7 per cent in the third quarter of 2009. This rate is 4.2 per cent higher than the figure of second quarter of the said year.
This surge signifies a rising rivalry between the four major banks and second-tier lenders in the home loan sales market because of improved economic conditions. Because of this development, Loan Market Group executive chairman Sam White stated that non-bank activity will continually increase by 2010 and the four major banks will have a run for their money.
