$21 billion in mortgages, as fixed rate products fall
One of the country’s largest broker aggregators, Australian Finance Group Limited, has revealed more than $21 billion in residential mortgages were lodged in the final three months of the 2023 calendar year, up 5.27% on the same period the previous year.
Sharing its second-half FY23 results with the market on Thursday, AFG CEO David Bailey (pictured above) said after a challenging year with rapidly increasing interest rates and cost of living pressures “the mortgage broking channel has once again proven vital to help drive competition and guide consumers with their choice of finance options”.
“The latest results show lodgement activity was up 5.27% on the same period last year, with the Northern Territory (up 12.49%), Queensland (up 12.13%), South Australia (up 8.81%), and Western Australia (up 7.74%) leading the way,” Bailey said.
“Activity was slower in the country’s two largest states, NSW being up 2.51% and Victoria up 2.89% on the same period at the close of 2022.
Referring to the AFG December 2023 Quarter Index, Bailey said “customers choosing fixed rate products had dropped even further from 4.8% to 2.3% for the quarter and standard variable products were up from 81.2% to 86.1%.”
The results come after AFG announced a strong start to the 2023 financial year, generating a record first-half gross profit of $62 million.
AFG: Fewer customers choosing fixed rate loans
Bailey said after a sustained period of cheap fixed rates, it was the lowest percentage of fixed rate products ever recorded within the AFG Index.
“With borrowers’ expectations building that the next interest rate movement may be down, it’s clear the short-term romance with fixed rates is well and truly over,” Bailey said.
“Funding disparity is easing however the major lenders have still made up more ground on their non-major competitors, with their market share increasing this quarter to 60.2% from 57.5% in Q1 24.”
Bailey said the majors’ market share lift was achieved across all product categories with volumes for first home buyers up 3.7%, investment loans up 3.6%, refinance and upgrader volumes both up 2.2% and interest only and principal and interest loan volumes heading to the majors were both up 2.8%.
AFG Home Loans lodgements on the rise
AFG Home Loans total lodgements represented 7.3% of all loan flow – up from 5.8% on the same time last year and up from 5% in the first quarter of financial year 2024.
“Average loan sizes have increased across the country, with a national average increase of just under $19,000 or 3.14%, likely reflecting the competitive conditions prevalent in the housing market at present,” Bailey said.
“Loan to Value Ratios (LVR) were stable across the board reflecting increased property valuations in line with the increase in average loan sizes.”
Turnaround times from the time of submission to formal approval is steady at 17.3 days.
Meantime, AFG announced the appointment of Rebecca Gravestock as chief people officer on Thursday.
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