Deteriorating consumer confidence has pushed mortgage sales to record lows, according to a leading mortgage broker, which say national mortgage sales dropped by 31.5% in May compared to the same time last year.
The result of the Australian Finance Group (AFG) survey is a blow to the sector, which had been hoping for a recovery during the month.
Mark Hewitt, general manager of sales and operations with AFG, said that May was traditionally a strong month in terms of the property buying cycle.
"In past years, May has represented a high point in the property buying cycle, before sales reduce over the winter months. This May's figures not only buck the established trend, they represent a reduction of 6.1% on April," he said.
"Despite the benefits of the resource boom, Australia now finds itself in a similar position to the US and the UK with softening property prices combined with a sharp rise in the cost of living. The difference in mood between now and six months ago is like night and day."
While AFG figures aren't definitive, independent analysis has shown they're usually within 10% accuracy of ABS figures released six weeks later. AFG Mortgage Index figures have been published since August 2004.
The Index also revealed a dramatic fall in the take-up of fixed rate loans, which peaked at 25.3% of all new loans in February this year, when new mortgage buyers sought cover from the prospect of rising interest rates. They slid to a low of 13.7% in May, which is the lowest figure for fixed rate loans since September 2005 (10.9%).
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