This article is from the Australian Property Journal archive
MAY used to represent a high point in the property buying cycle but faltering consumer confidence has sent mortgage sales plummeting, according to AFG.
According to the AFG Mortgage Index, national mortgage sales totalled 6,691 – down 31.5% lower when compared to 9,762 sales in May 2007.
On a month to month basis, May mortgages sales fell 6.1% on April.
AFG’s sales and operations general manager Mark Hewitt said 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,” he added.
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%).
South Australia was the worst affected, mortgage sales fell 31.0% followed by Western Australia down 26.9%, New South Wales down 25.6%, Victoria down 20.1% and Queensland down 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.
Australian Property Journal
