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Wednesday, 13 October 2021

Mortgage size hits $600k

AFG surges

Australian Finance Group, one of Australia's largest mortgage aggregators, reported a very strong first quarter to kick off the new financial year, with $24 billion in mortgages lodged.

This is well up from $18 billion in last year's lull for the prior corresponding period, with each of the major states reporting strong annual increases in lodgements.

The average new mortgage size ticked over $600,000 for the first time (this is higher than system, for a range of reasons). 

After a blip during the COVID shutdowns, the uptrend in the average new mortgage size has resumed. 

The increase is being driven by Queensland, where the average new mortgage size has surged by 19 per cent from a year earlier due to the base effect - although the state level increases over two years are much less dramatic. 

Due to the low interest rate environment, a record 38 per cent of borrowers chose a fixed rate mortgage. 

The share of investor (27 per cent) and interest-only (17 per cent) lending is now increasing, but not yet to high levels. 

AFG expects the regulatory intervention to reduce borrowing capacity, and noted that: 

“In a positive sign of the stability of the market, Loan to value ratios (LVR) were once again down across the board meaning valuations are continuing to outpace the growth in loan sizes and borrowers were not drawing up to the full value of their homes".