Two out of five mortgages were investments in 2009

Friday January 8, 2010

Latest figures from the Australian Finance Group have shown that in 2009 two out of every five mortgages were for investment properties, especially within New South Wales. In fact, the state of New South Wales reported a 17 per cent increase by the end of December 2009 with $180 million invested in properties as compared to $153 million the previous year.

Overall, however, the entire mortgage market for December 2009 showed reports of the third consecutive decline in any many months. September 2009 saw the Australian Finance Group set up $2.9 billion of mortgage finance nationally whereas this slipped down to $1.9 billion by December 2009.

When it comes to loans themselves the Australian Finance Group reports show that fixed rate mortgages dropped down to an unprecedented low of 2 per cent of the entire product mix with a massive 77 per cent of new mortgage borrowers opting for the variable rate home loans. The remainder of borrowers were split between either introductory or equity mortgages.

General Manager Sales and Operations, Mark Hewitt stated that the AFG had been expecting such results due to the three consecutive months of declining mortgage financing.

"We have been warning for months that three rate rises in a row was overkill for a vulnerable market, and the latest figures confirm our fears. Yes, December is traditionally a slower month than November, but when we saw last month was a 20 per cent fall compared to an 80 per cent fall in 2008." Mr Hewitt stated.

"When you combine the effects of increasing, out of cycle lending rates and tighter credit criteria with an end to the first home boost, what you get is a combination of factors that constrains confidence.

"Property investors, able to take a long term view, are hoping to ride a new upward style in property values, but right now ordinary families are sitting on their hands rather than upgrading."

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