Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), & 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's 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 & charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, author of the New York Times bestsellers 'End Game' & '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 Hmmm, one of the world's most popular & widely-read financial publications.

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

Thursday, 7 July 2016

Average loan size hits an all-time high

Seasonal mortgages rebound

The country's largest mortgage aggregator Australian Finance Group (AFG) sold a record $14.6 billion of mortgages in the second quarter of 2016. 

The data is not seasonally adjusted, however, and the national figures do suggest that the annual rate of growth in mortgage volumes has slowed, possible impacts of compositional change notwithstanding. 

Perhaps most notably, investors now comprise just 34 per cent of mortgages, well down from the 40 per cent level seen in the preceding financial year before APRA implemented tighter measures in order to constrain investment lending. 

State versus state

AFG commented on the numbers:

"The traditional powerhouse states of Victoria and NSW led the way, up 16.6 % and 12.2% respectively. 

South Australia was up 12.2% for the financial year and Queensland recorded a lift of 4.2% on the previous financial year. 

On the flipside a drop of 13.4% in WA was not unexpected as the state comes to terms with life post-mining boom."

The quarterly dollar lodgement volumes, not seasonally adjusted, are charted below. 

Record loan size

The average loan size hit a new high of a tick above $478,000 in the June quarter, representing a 19.5 per cent increase over the past three years. 

The gains were driven by new record high mortgage sizes in New South Wales ($591,925) and in Queensland ($399,375).

The average loan size in New South Wales is 23 per cent higher than three years ago, although average loan-to-value ratios in NSW tend to be consistently reported as being lower than in other states (presently 69 per cent, as compared to 72 per cent in Victoria). 

The wrap

Overall loan volumes reported by AFG were 7 per cent higher over the financial year, broadly in line with prospectus expectations with non-major lenders lifting their share of the market to 29.1 per cent. 

AFG also reported that fixed rate loans as a percentage of overall volume have increased from 14.5 per cent at the start of the financial year to close at 18.7 per cent by the end of the financial year, as borrowers enjoy record low mortgage rates.

Futures markets are pricing a 60 per cent chance of the cash rate being cut to a fresh record low at the Reserve Bank's August meeting.