Released yesterday, the AFG Mortgage Index reveals the average LVR rose to 68.2 per cent last month from 66.6 per cent in June.
AFG general manager of sales and operations Mark Hewitt said the rise is consistent with a two per cent drop in investor loans.
“Investors typically use equity in existing property to fund their investments, thereby reducing overall LVRs,” Mr Hewitt said.
“Victoria’s LVR of 71.2 per cent, like WA’s of 71.5 per cent, are higher than the national average, indicating lower levels of investors, compared with other types of borrowers in those states,” he said.
Demand for mortgages from Victorian brokers reached record levels last month.
AFG processed $1.09 billion in home loans for Victoria in July – the first time it has ever processed over $1 billion for any state outside NSW.
Demand for home loans in Victoria was led by borrowers seeking to invest (34.9 per cent), refinance (34.4 per cent), and upgrade (21.1 per cent).
Only 9.6 per cent of new loans were for first home buyers, a decline from the previous month (11.3 per cent).
“Victoria has traditionally been the state with the lowest use of brokers, but this is starting to change,” Mr Hewitt said.
“With increasing competitiveness and complexity in the mortgage market, we are seeing a marked shift in borrowers using brokers to help them find the best deal,” he said.
“The resilience of the Victorian market, defying concerns about high-rise over-supply, is another factor underpinning mortgage demand there.”
Demand in WA was 21.2 per cent higher than in July 2013, NSW 12.8 per cent, QLD 11.6 per cent, and SA 3.7 per cent.
Overall, AFG processed $4.1 billion in mortgages in July – its second biggest month since the record $4.2 billion in May 2014, and 21 per cent more than in July 2013.