Mortgage size soars, sales fall

The average size of a new mortgage in Australia has climbed to a record high in November, as investors continue to re-enter the market.

According to AFG’s mortgage index, mortgage sizes have been on the rise since the middle of the year, having increased by 6.4 per cent since May.

On a state-by-state basis, Victoria experienced the strongest growth with the average mortgage size up by 12.1 per cent since May, NSW up 10.7 per cent and Western Australia up three per cent.

Despite the surge in mortgage size, AFG’s general manager of sales and operations Mark Hewitt said confidence was still fragile, particularly on the loan sales side.

"While larger average mortgages and greater activity by investors are usually the signs of a confident market, October and November are seasonally strong [sales] months in the calendar but we've seen two straight months of decline,” he said.

Overall sales of new mortgages fell by 8.36 per cent to 6,541 in November, from October, with fewer first home buyers in the market.

First home buyers accounted from 13.7 per cent of new loans arranged in November, compared to a peak of 28.1 per cent in March.

However, property investors continued to re-enter the market, accounting for 33.8 per cent of new mortgages arranged in November – the highest this year – up from a year low of 24.7 per cent in March.

Mr Hewitt said buyers may again be deterred after the Reserve Bank lifted the official interest rate by 25 basis points to 3.75 per cent on Tuesday, following similar moves in October and November.

"In our view, the RBA has gone too far in ratcheting rates back up again," he said.

The average size of a new mortgage in Australia has climbed to a record high in November, as investors continue to re-enter the market.

According to AFG’s mortgage index, mortgage sizes have been on the rise since the middle of the year, having increased by 6.4 per cent since May.

On a state-by-state basis, Victoria experienced the strongest growth with the average mortgage size up by 12.1 per cent since May, NSW up 10.7 per cent and Western Australia up three per cent.

Despite the surge in mortgage size, AFG’s general manager of sales and operations Mark Hewitt said confidence was still fragile, particularly on the loan sales side.

"While larger average mortgages and greater activity by investors are usually the signs of a confident market, October and November are seasonally strong [sales] months in the calendar but we've seen two straight months of decline,” he said.

Overall sales of new mortgages fell by 8.36 per cent to 6,541 in November, from October, with fewer first home buyers in the market.

First home buyers accounted from 13.7 per cent of new loans arranged in November, compared to a peak of 28.1 per cent in March.

However, property investors continued to re-enter the market, accounting for 33.8 per cent of new mortgages arranged in November – the highest this year – up from a year low of 24.7 per cent in March.

Mr Hewitt said buyers may again be deterred after the Reserve Bank lifted the official interest rate by 25 basis points to 3.75 per cent on Tuesday, following similar moves in October and November.

"In our view, the RBA has gone too far in ratcheting rates back up again," he said.

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