Mortgage approvals at 18-month high

Mortgage broker AFG has recorded a 21% surge in mortgage approvals in August, with investors and first-time buyer numbers on the increase.

Mortgage approval numbers reached an 18-month high in August.

AFG brokers successfully lodged 7,198 mortgage applications, with a combined value of $2.76 billion.

In July, AFG brokers lodged just over 5,900 applications with a combined value of $2.29 billion.

The August numbers are the first sign of uplift in the housing market – AFG has more than 2,000 mortgage brokers and a mortgage book in excess of $65 billion.

While August figures are typically stronger than previous months, August 2011 figures trended well above seasonal expectations, AFG says.

The average size of mortgages fell from $386,000 to $384,000, with only WA recording an increase from $371,000 to $382,000.

The percentage of mortgages for investment purposes increased from 35.6% to 36.5% while those from first-time buyers increased from 13.6% to 13.8%.

NSW led the nation both in terms of investor and first-time buyer activity over August.

Investors made up 40.8% of the NSW market followed by 38.1% in Victoria, 34.4% in Queensland, 33.5% in South Australia and 33.4% in WA.

First-time buyers accounted for 15.7% of mortgages written in NSW, followed by WA (14.8%), Victoria (13.3%), Queensland (13.1%), and South Australia (9.3%).

Refinancing activity remained strong comprising 38.2% of all mortgage approvals as property owners took advantage of a highly competitive lending environment. This is slightly down on the 39.1% recorded in July. 

“Borrower expectations about interest rates shifted significantly during August. We’re seeing a lot of refinancing as borrowers take advantage of discounted products,” says Mark Hewitt, AFG’s general manager for sales and operations. 

“But we’d like to see lenders create more flexible and competitive products for the new home building sector. It isn’t just consumer confidence that is holding back this sector, it is also the availability of attractive finance options.”