worst may mortgage sales on record

WORST MAY MORTGAGE SALES ON RECORD: LATEST FIGURES
Mortgage sales plummet as consumer confidence takes a pounding
4 June 2008

May mortgage sales throughout Australia were the worst since the AFG Mortgage Index began according to AFG, Australia’s largest mortgage broker, which has 10% of the mortgage market. AFG Mortgage Index shows that national mortgage sales during May (6,691 in total) were 31.5% lower than in May 2007 (9,762), 22.6% lower than in May 2006 (8,648) and lower even than in May 2005 (7,243).

While AFG figures are not definitive, independent analysis has shown they are usually within 10% accuracy of ABS figures released six weeks later. AFG Mortgage Index figures go back to August 2004.

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.

AFG Mortgage Index also shows a dramatic fall in the take-up of fixed rate loans. These 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. However they slid to a low of 13.7% in May – the lowest figure for fixed rate loans since September 2005 (10.9%).

Mark Hewitt, General Manager of Sales and Operations says: “Consumer confidence has taken an absolute pounding. These figures show just how fearful many people are right now about the rising costs of food, fuel and mortgage repayments. Despite the benefits of the resource boom, Australia now finds itself in a similar position to USA and 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.”

Mortgage sales across the country were significantly lower than in May 2007 with South Australia the worst affected (minus 31.0%) followed by WA (minus 26.9%), NSW (minus 25.6%), VIC (minus 20.1%) and QLD (minus 19.5%).

AFG Mortgage Index also shows a significant increase in the proportion of buyers taking out Introductory mortgages on cheaper initial rates. These have risen from 5.8% at the beginning of the year to 12.8% in May.

AFG MORTGAGES SOLD
MONTH..TOTAL..TOTAL...AVG....PIs..% ReFi
.......No.....AMOUNT..SIZE
Apr 07 7,628 $2,345 m $307k 33.8% 35.47%
May 07 9,762 $3,108 m $318k 33.0% 34.97%
Jun 07 8,195 $2,600 m $317k 33.7% 35.19%
Jul 07 8,645 $2,760 m $319k 30.8% 33.52%
Aug 07 9,412 $3,030 m $321k 32.3% 32.98%
Sep 07 7,412 $2,442 m $329k 32.9% 34.65%
Oct 07 8,797 $2,840 m $322k 31.0% 36.24%
Nov 07 8,221 $2,742 m $333k 32.5% 36.43%
Dec 07 6,125 $1,999 m $326k 33.9% 35.24%
Jan 08 6,471 $2,056 m $317k 30.8% 37.04%
Feb 08 7,574 $2,438 m $321k 29.0% 38.42%
Mar 08 6,498 $2,120 m $326k 31.4% 39.34%
Apr 08 7,125 $2,247 m $315k 33.2% 35.9%
May 08 6,691 $2,233 m $333k 32.8% 36.1%

LOAN TYPES
MONTH..BASIC.EQUITY.FIXED.INTRO.STANDARD
Feb 07 18.9% 14.7% 24.0% 5.4% 36.7%
Mar 07 18.1% 14.4% 23.3% 6.0% 37.9%
Apr 07 19.8% 15.1% 24.2% 5.7% 34.9%
May 07 20.1% 18.8% 20.3% 5.7% 37.7%
June 07 19.7% 15.4% 20.4% 5.4% 38.7%
July 07 20.1% 16.1% 16.5% 5.9% 41.0%
Aug 07 19.5% 14.8% 18.3% 5.9% 41.2%
Sep 07 19.3% 14.9% 20.4% 5.9% 38.8%
Oct 07 19.1% 14.7% 23.2% 5.1% 37.6%
Nov 07 18.6% 13.7% 27.3% 5.3% 34.9%
Dec 07 18.9% 14.2% 23.3% 4.7% 38.8%
Jan 08 18.8% 14.3% 24.3% 5.8% 35.3%
Feb 08 17.3% 14.3% 25.3% 5.0% 35.6%
Mar 08 16.9% 15.2% 24.0% 5.3% 38.5%
Apr 08 18.5% 14.5% 18.4% 9.5% 39.1%
May 08 18.2% 15.2% 13.7% 12.8% 39.9%