Australians are reducing their mortgage debt and are less willing to take on more debt, according to the latest figures from Australia’s largest mortgage broker.
According to the AFG Mortgage Index, for the first time in 12 months national mortgage sizes went into reverse from an average $307k in September to $299k in October, suggesting that consumers are apprehensive about rate rises.
The last time the average mortgage was under $300k was six months ago, in April 2006.
AFG’s executive director Malcolm Watkins said the figures send out a clear message about the temperature of the property market.
“Worries about rate rises are eroding the confidence of buyers across the country, and for the first time we’re even seeing signals of caution in WA,” he added.
The 2.6% fall in the national average reflects falls in the average loan amount of 9% in Victoria and 8% in Western Australia – the first setback for a state, which has seen its average mortgage rise from $282k in January to a peak of $341k in September.
Last month in a formal survey, 350 brokers told AFG that one rate hike would be painful and two would significantly damage the market.
“It’s the East Coast that has the most to lose with a rate rise. When you see WA slow just on the threat of one rate rise, it makes me even more concerned about the potential impact in other States,” Watkins said.
The AFG Mortgage Index also showed a high of 20.5% of property buyers opting for Fixed interest rate mortgages – up from 18.8% in July, and further underscores fears about rate rises.
The national average of 28.9% of new mortgages were sold to investors, this figure reduces to 22.8% when WA is excluded from the calculation.
Across the country, month-on-month sales slowed in Victoria by 13% and South Australia by 14%.
By Kathryn O’Meara
