'Fear' causes home loan slowdown

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Consumer unease has led to declining mortgage sales in July, according to Australia's largest mortgage broker.

The AFG Mortgage Index for the month has shown a 3.7% drop in mortgages sold for July. AFG general manager of sales and operations Mark Hewitt said the results indicate continued wariness among consumers.

"These figures confirm a much more worrying trend: that most Australians are still fearful about their financial future. Ever since the interest rate rise last November, home buyers have gone into their shells.

Hewitt highlighted that Western Australia, supposedly the prime beneficiary of a resources boom, has the most depressed property market of all.

"Domestic financial news is dominated by talk of rate rises and the carbon tax. Gloomy international financial news has seen stock markets slump. We’re all looking for strong economic leadership to provide the market with some much needed confidence," he commented.

Refinancing continued to account for the most active segment of the mortgage market, representing 39.1% of home loans. Owner-occupiers moving house or upgrading their current home accounted for just 11.7% of sales.

AFG added that major banks continued their dominance of the mortgage market in July. The big four and their subsidiaries wrote 81.7% of all new home loans for the month.

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