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Brokers aggregating under AFG lodged more than $81 billion in home loans over FY21, after closing the year with a record quarter, new figures show.
According to the latest AFG Index, over the three months to 30 June 2021, brokers lodged a record $22.6 billion in mortgages.
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The figure represents the highest ever lodgement record for the group, and is an increase of 10 per cent on the previous quarter and 34 per cent on the corresponding quarter last year (when AFG brokers lodged $16.8 billion).
The data shows that brokers aggregating under Australian Finance Group (AFG) have now written a record volume of loans in every consecutive quarter since the fourth quarter of FY20.
As well as recording record-high lodgements, the average loan size written by brokers also reached a new high in Q4, coming in at just under $600,000 ($593,250).
All states except the Northern Territory saw a quarter-on-quarter rise in the average loan size, with the NT also being the only state/territory that recorded a drop in home loan lodgements over the quarter (falling from $45.7 million to $41.4 million).
Both NSW and Vic lodgements were up by over $85 million in the quarter (totalling $7.8 billion and $7.5 billion, respectively), while WA increased to $2.4 billion, Qld to $3.7 billion and SA to deliver $1.1 billion of home loan lodgements for the quarter. The exception was the Northern Territory, which was down 10.2 per cent on the prior quarter to $41 million.
Loan-to-value ratios (LVR) fell to under 70 per cent for the first time in over a year, with the average national LVR in Q4 dropping to 69.6 per cent.
AFG CEO David Bailey commented: “With speculation that the market is overheated, it is reassuring customers are not drawing up to the full value of their properties and are instead retaining equity.”
Who is driving volumes?
Uprgraders continue to make up more than two-fifths of all lodgements, despite a growing proportion of borrowers refinancing, according to AFG.
Mr Bailey stated: “While upgraders remain the main source of lodgements at 42 per cent, refinancers fuelled by cashback offers from some lenders also drove activity, jumping by 4 percentage points to be 27 per cent of the market.
“Continuing the increasing trend observed in the third quarter, investor activity increased a further 2 percentage points to 25 per cent.”
Mr Bailey noted that, despite first home buyer applications having hit record highs over FY21 (peaking at 23 per cent in the first quarter of the financial year), this had dropped back to 14 per cent of total activity for the final quarter of the year.
This may be accounted for by the ending of some government incentives, such as HomeBuilder.
Fixed rate mortgages also reached their highest ever level, with 38 per cent of all mortgages lodged by AFG brokers having a fixed interest rate (and a record-low level of just over 54 per cent having a standard variable rate).
The vast majority of borrowers (84 per cent) were using principal and interest (P&I) products.
The AFG Index also found that the major banks gained more business from AFG brokers in Q4, taking 59.3 of loans.
Mr Bailey commented: “On the back of a consistent cashback offer, the Westpac group is taking the lion’s share of the increase, jumping from 17.9 per cent to 22.7 per cent of the market.
“ANZ recorded another dip as their share of the market dropped from 9.4 per cent to 6.9 per cent.
“With the tapering of the term funding facility free kick, it will be interesting to see if cashback offers continue, especially given the fixed rate bonanza for customers appears to be ending.”
The aggregation group also found that lender turnaround times had improved slightly over the last three months of the financial year, with the average number of days from submission to formal approval dropping from a record high of 27 days in Q3 to 25 days.
“While pleasing to see a reduction, customers should consult with their broker as there are many lenders with strong offers in the market with turnaround times considerably inside 25 days,” Mr Bailey concluded.
Several lenders recently told Parliament the reason why broker-lodged loans were taking so long.
Following requests for information on turnaround disparity between direct and broker channels, banking heads were asked to provide written responses to the House of Representatives standing committee on economics on the reasoning for it.
Most lenders put the disparity down to a range of reasons, varying from technology to regulation and loan complexity.
All of the banks with sizeable differences in turnarounds cited a spike in demand.
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