Mortgage broker AFG processed a record $1.09 billion worth of home loans in Victoria in July.
The monthly surge in mortgage lending was more a sign of changing borrower preferences for brokers over banks and less the result of rising demand for home loans, AFG general manager of sales and operations Mark Hewitt said.
“The market is quite good, but I wouldn’t say it, has been booming. People have been talking it down, by saying the Melbourne apartment market is oversupplied,” Mr Hewitt told The Australian Financial Review.
The big banks have traditionally had strong footholds in Victoria and conservative borrowers have been more inclined to go straight to their branch rather than use a broker.
“That has slowly been changing over time,” Mr Hewitt said.
“Banks realise that brokers are a flexible cost to them and bring in clients. They only pay them when a broker writes a home loan,” Mr Hewitt said.
While Victoria was far and away the standout market for AFG over July with the value of home loans up 44 per cent compared with a year ago, all states recorded higher year-on-year numbers. In Western Australia, mortgage sales rose 21.2 per cent, in NSW, they were up 12.8 per cent and in Queensland they rose 11.6 per cent.
Investors and those refinancing their home loan to take advantage of home loan rates well below 5 per cent dominated mortgage lending over July. First-home buyer fell to just 9.8 per cent of the market – the lowest number since AFG began recording monthly data six years ago.
A lack of affordability and the withdrawal of first-home buyer grants for existing homes in most states were the main factors behind record low first-home buyer participation, Mr Hewitt said.
The figures also showed an increase in borrowers taking out introductory “honeymoon” home loans offering special discounts as competition intensifies among lenders.
Brokers now write 50 per cent of home loans nationally.