Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), and CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

5 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - & author of Things That Make You Go of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, MacroBusiness.

Thursday, 5 March 2015

AFG mortgage volumes mushroom after rate cut

AFG mortgages explode

The ABS Housing Finance figures had already strapped on a jet pack in the month of December 2014 prior to the interest rate cut as I looked at in detail here.

In particular, it was noticeable that Sydney investor lending was turning parabolic by the end of Q4.

The ABS figures recorded more than $30 billion of mortgage finance written in that one month alone.

For more timely information it is always interesting to follow what is happening on Australian Finance Group's (AFG) monthly mortgage index as the largest mortgage aggregator in the country.

The AFG data is not seasonally adjusted and therefore we do expect to see a lull in January due to the Christmas break.

Sure enough, we did see this, but the number of mortgages written rebounded very sharply in February.

Indeed in terms of mortgage volumes processed the index soared by more than 58 percent to $4,368 billion in February 2015, an increase of 16.2 percent year-on-year.

Rate cut has instant impact

What the indices do not show clearly is the almost instantaneous impact of the February interest rate cut.

On February 21 - or what is being referred to as "Super Wednesday" - AFG processed a record $280 million of mortgages in just one solitary business day, the largest single day volume in the group's 21 year history.

Mortgage demand is clearly not spread evenly across the country, with mortgage volumes declining in Western Australia over the past year, yet New South Wales (ready: Sydney) seeing a gargantuan surge in volumes of 76 percent.

South Australian speculation?

While investor activity remains elevated across the country, there was an interesting spike in South Australia in February with some 42.7 percent of loans written for investors in February.

Granted AFG's volumes for South Australia are typically relatively small and therefore are volatile, but perhaps there are some signs of life in Adelaide after a relatively dismal six years for that market.

The Wrap

Taken in isolation these figures may or may not be indicative of a surge in lending.

However, CoreLogic's latest Mortgage Index which charts "platform events" versus ABS owner-occupier Housing Finance commitments also portend a "likely surge" in mortgage demand across the coming months.

Taken together, we might expect to see records tumbling when the ABS releases its next two rounds of Housing Finance data, with the January figures due to be reported next Wednesday. 

It may also be portentous the investor Lending Finance data at the state level will be released on Friday 13 - figures which will sound the death knell for forecasts of a steady deflation in mortgage demand.