Lenders have ramped up their credit controls by further lowering the amount they lend to borrowers.
According to AFG, the loan to value ratio (LVR), or the proportion of amount borrowed against the value of the property, has fallen to a record low during the month of June 2010.
LVRs reached a national low of 61.6% in June compared to 73% during the first half of 2009. AFG said LVRs have been in steady decline ever since.
Malcolm Watkins, Director of AFG said lenders are demanding higher deposits from potential home buyers while mortgage insurers, who provide cover to lenders for loans at higher risk of default, are increasingly insisting that buyers have deposits of around 20%.
The number of loans taken by first homebuyers continued to plunge, accounting for just 9.5% of all loans sold in June compared to 19.5% in the same month last year. In contrast, investors continue to strengthen, with 35.4% of all loans taken for property investments.
The number of people refinancing also rose to its highest level in a year, accounting for 39% of all loans sold by the mortgage broker.
“During the first six months, continued government stimulus measures, a rising stock market and a positive mining message saw real momentum build. What we’ve seen in the past six months, particularly the last quarter, is a reversal of fortune. Credit is still being restricted and confidence has taken a bashing,” he said.
Internal analysis at AFG showed mortgage activity shifting away from the resource states of Queensland, WA and South Australia during the past six months as fears of a super mining tax dented consumer confidence. Watkins noted that Victoria and New South Wales have performed above expectations as investors in particular have responded to increased housing demand from a growing population.
With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now
Top Suburbs :
Get help financing your investment
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local expert Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus, our mortgage broking service is at no cost to you.
We value your privacy and treat all your information seriously - you can check out