AFG: Upgraders, refinancers and investors most active borrowers: Major banks win market share

One of Australia’s leading mortgage broking firms posted another record quarter on the back of frenzied buying in a roaring housing market. 

AFG company reported a 10 percent jump in home loan lodgements to $22.6 billion for the June quarter compared to the previous three months. This is a massive 34 percent on the year-ago same quarter. 

According to AFG chief executive, David Bailey, upgraders, refinancers and investors were the most active buyers in the market as first home buyers are being forced out by the higher prices. 

“Whilst upgraders remain the main source of lodgements at 42 percent, refinancers fuelled by cashback offers from some lenders also drove activity, rising 4 percent to be 27 percent of the market,” he said. 

“Continuing the increasing trend observed in the third quarter, Investor activity increased a further 2 percent to 25 percent. 

“However, despite hitting highs of 23 percent of application flow during the year on the back of support of state and federal government assistance packages, first home buyer activity dropped back to 14 percent of total activity for the final quarter of the year,” he said. 

AFG data showed record lodgements were seen across the country in June compared to the March quarter. New South Wales is up 12.16 percent from the quarter to $7.87 billion and Victoria up 12.76 billion to $7.54 billion. Western Australia rose 5.19 percent representing a massive 31.5 percent increase over the financial year to $2.39 billion.  

Queensland lodgements increased by 5.28 percent for the quarter to $3.68 billion and South Australia recorded a 7.27 percent rise to deliver $1.12 billion of home loan lodgements. 

The notable exception was the Northern Territory, which was down10.17 percent to $41 million. 

“The national average mortgage size has also increased to $593,250, up from $573,767 last quarter,” Bailey said. Loan to value ratios, however, were down everywhere meaning valuations are outpacing the growth in loan sizes.  

“With speculation that the market is overheated, it is reassuring customers are not drawing up to the full value of their properties and are instead retaining equity.” 

The AFG chief executive said fixed rate home loans were at their highest ever level of 38 percent.  He also said borrowers are also opting to pay down their loans with 84 percent choosing principal-and-interest mortgages ahead of interest-only home loans. 

Banks lift market share 

The major banks have lifted their share of the market by 2.2 percent to 59.31percent. 

“On the back of a consistent cashback offer, the Westpac group is taking the lion’s share of the increase, jumping from 17.97 percent to 22.73 percent of the market. ANZ recorded another dip as their share of the market dropped from 9.41 percent to 6.93 percent,” he noted. 

“With the tapering of the term funding facility free-kick, it will be interesting to see if cashback offers continue, especially given the fixed-rate bonanza for customers appears to be ending." 

Among the non-majors, Macquarie’s share dropped from 9.91 percent to 8.53 percent for the quarter. 

“In a positive sign, lender turnaround times are showing signs of improvement with the average number of days from submission to formal approval dropping back to 25 days from a high of 27 days in the previous quarter.” 

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