The number of home loans processed by Australia's largest mortgage broker, AFG, has dropped to its lowest level since the inception of its Mortgage Index in 2004.
January’s figure of $1.31bn in mortgage sales was $237m lower than the previous January’s mark, and was 40% below the average monthly figure for 2010 as a whole.
A flood ravaged Queensland saw the largest drop in the number of mortgages processed, recording only 48.9% of its December figure, while month on month sales also dropped significantly by 39.6% in Victoria, 33.6% in South Australia, 31.8% in New South Wales and 28.6% in Western Australia.
“As we may have expected, the floods have dealt a significant blow to the local property market. But the disaster has affected sentiment across the whole country. In times of national crisis, people hunker down and put off major buying decisions,” said AFG executive director Kevin Matthews, who also laid part of the blame at the feet of real estate professionals.
“Additionally, consumer confidence is being adversely affected by the huge discrepancies between so-called experts on where property markets are heading. Some tell us real estate is overvalued by up to 40%. Others are telling us we’ve hit the bottom and should expect prices to pick up. All of this is undermining the confidence of potential buyers,” he said.
Further evidence that buyers are remaining cautious was indicated by a big drop in the average LVR, with January’s figure of 54.9% showing a marked shift downwards from the previous year’s range of 61.6% to 64.2%.
The percentage of AFG’s January mortgage sales that went to property investors remained at the 2010 level of around 35% (34.7%), while the percentage of first home buyers jumped significantly from 11.4% in December to 14.1% – beating last year’s January high of 12.9%.
With a 10% share of the national mortgage market, AFG believes that its figures are representative of the market as a whole and are likely to pre-empt official ABS statistics set to be released in six weeks.
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