AFG is warning that the mortgage market is 'stalling' as its October figures show a stark decrease in the number of mortgages taken out.
The aggregator's monthly mortgage data for October has revealed that it arranged $2.2bn in mortgages in October 2010 – down 17.5% in volume on the same month last year, and 4.3% lower than September's already 'subdued' figures. NSW was the worst affected state, where mortgage sales fell 13.1% month-on-month.
AFG managing director Brett McKeon argued that the reason for the slowdown is simple: the likelihood of interest rate rises.
'All the data suggests that ordinary Australians are worried about rate rises," said McKeon "They are in lockdown mode, saving their money instead of spending it, which would be healthier for the economy. The politicians in Canberra are responding to this fear with populist claptrap about inquiries and regulation, but the horse has already bolted and unless something is done it will take half a decade to see proper competition return."
He dismissed the idea of a commission into banking competition and rate setting, calling it "farcical"
"Everyone knows that the best way to keep rates keen is to promote competition. But by allowing the fifth and sixth largest banks to be taken over by the Big Four, and by structuring the AOFM to benefit only the Big Four, no one has more effectively sabotaged lender competition in Australia than this Government.
"If it goes ahead with a commission, to avoid self-incrimination the Government will have to restrict the terms of its inquiry so much that its findings will be meaningless."
The AFG data also saw a continued rise in fixed-rate mortgages, presumably as consumer worries over interest rates have escalated, and a fall in the proportion of first-home buyers in the market versus September.
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