Investors drive demand for mortgage products

SYDNEY investors are driving demand for home loans. According to mortgage broker AFG, the volume of mortgages processed jumped by 18.9% to $21.7 billion in the second half of 2013.

The figure is higher than $18.3 billion recoded in the first half. The July to December figure is 18.9% higher than for the first half of the year, and 27% higher than for the same period in 2012.

New South Wales showed the largest increase, with mortgage volumes in the second half of the year soaring 33%. In Victoria, the increase was 21%, Queensland 13%, Western Australia 8% and South Australia 6%.

AFG sales and operations general manager Mark Hewitt said NSW was the investment capital during the second half of 2013, with a lot of mortgage activity accounted for by Sydney focused investors, upgraders and people looking to refinance.

“The dearth of first home buyers in NSW continues to be a long term concern.

“Even if investment activity levels in Sydney taper during 2014, elsewhere in the country we’re seeing solid, sustainable growth, with first home buyers underpinning the long-term health of the markets, especially in SA and WA,” he added.

The AFG Mortgage Index also shows that average Loan to Value Ratios fell to 67.3% in December, their lowest level since June 2012 (66.9%).

Hewitt said this reflects the high proportion of activity by investors, who tend to have greater equity levels than first home buyers. States with stronger levels of first home buyer activity also had higher average LVRs – WA (71.3%) and SA (70.0%).

Property Review

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