AFG fixed-rate demand increasing as ME Bank locks in 45% of all new borrowers

AFG recorded a fall in mortgage sales in September, but an increase in borrowers that chose to fix their home loan, according to the mortgage broker’s latest monthly mortgage index.

Fixed-rate mortgage sales accounted for 21.5% of all new home loan sales over September up from 19.9% in August and 16.8% in July with three-year fixed rate home loans particularly popular.

One of the lenders on AFG’s panel, ME Bank recorded a surge in fixed-rate mortgage applications, which now account for 45% by value of all new applications, up from 14% earlier in the year.

ME Bank offers a three-year fixed home loan at 5.39% - one of the lowest in the market.

A procession of lenders have cut their fixed rates over the past few weeks including the major banks and regional banks.

While fixed rate demand increased, overall demand for housing finance fell in September.

AFG processed $2.7 billion of loans last month compared with $2.6 billion in September 2011.

Mortgage sales were down more than 10% from the $3 billion recorded in August reflecting the latest RBA figures to August, which has mortgage growth at an annualised rate of just 4.8% - the lowest for records going back to 1991.

The number of home loans arranged by AFG brokers fell by nearly 850 over the month with brokers arranging 6,882 loans in September compared with 7,730 in August.

“We welcome the RBA decision. Both the figures and our brokers are saying that while there are some areas of confidence, things are generally very patchy,” said Mark Hewitt, general manager of sales and operations at AFG.

 “The property market has been slow to emerge from winter and whilst no one is expecting any dramatic rebounds, the interest rate cut will help.”

AFG also recorded that loan-to-value ratios increased from 66.9% in June to 69% in September.

First-home buyers accounted for just 13.2% of all AFG home loans arranged over September, down from 15.9% in August

Non-major banks gained market share to 24% of all new home loans last month – up from 22.2% in August.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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