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Mortgage aggregation group AFG has reported its second-best month of loan processing ever, even after experiencing a significant cooling of investment loans.
The aggregator announced yesterday that it processed a total of $5.1 billion in mortgages for June – a 34.5 per cent increase from June 2014, and the third time this year that AFG has passed the $5 billion threshold.
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AFG said that while overall mortgage figures continue to be buoyant, the June figures showed a significant decline in the proportion of investment loans – down to 36.9 per cent from a peak of 43.1 per cent in April.
The last time overall investment loans were at similar levels was in July 2013, when they comprised 35.9 per cent of all mortgages processed.
Investment loans in New South Wales dropped from 49.8 per cent in May to 41.6 per cent in June. According to AFG, the previous 12 months have seen investment loans running at an average of 49.5 per cent for the state.
The decline in investment loans was also evident in South Australia (from 41.8 per cent to 36.8 per cent), Queensland (from 36.1 per cent to 34.1 per cent), Victoria (from 36.5 per cent to 35.7 per cent) and Western Australia (from 31.8 per cent to 31.2 per cent).
AFG managing director Brett McKeon said the figures suggest that APRA’s investor lending crackdown is starting to take effect, but not at the expense of the overall mortgage market.
“If this trend continues, it should help allay concerns about overheating in Sydney, in particular, as investment levels there come back into line with the sustainable, long-term national average,” he said.
AFG’s latest index also showed that non-major lenders are continuing to claw back a greater share of the mortgage market, with 30.9 per cent of all mortgages processed in June for the non-majors – the highest it has been since the 32.5 per cent figure recorded in December 2014.
Furthermore, the index showed that non-majors are the strongest in winning refinancing loans (34.8 per cent of all new loans) but the weakest in competing for investors, where the major banks still dominate with 75.5 per cent of all new home loans.
The index also revealed that 14.2 per cent of new borrowers opted for a fixed-rate home loan last month, compared to 15.2 per cent in May, while 76 per cent of borrowers chose a standard or basic variable home loan in June.
[Related: AFG breaks monthly loan record]
