Mortgage aggregator AFG has recorded a drop in investor loans and further falls in first home buyer home loans processed in October.
However, the group processed more home loans last month than at any time in its twenty-year history, driven by a significant pick-up in demand from owner-occupiers.
The AFG Mortgage Index shows the company processed a total of $4.7 billion in mortgages last month, an increase of nine per cent over September (the previous all-time high), and 17 per cent higher than in October 2013.
For the first time in a single month, the company processed over 10,000 home loans (10,463).
But mortgages processed for investors slipped in every state.
The most marked fall was in South Australia, where investment home loans declined from 36.4 per cent to 30.5 per cent month-on-month.
Nationally, investor home loans represent 38.7 per cent of all mortgages processed, down from a peak of 40.3 per cent recorded last month.
“October has traditionally been one of the strongest months for property and the spring buying season is well and truly upon us, which is why we’re seeing the increase in owner-occupier loans,” AFG general manager of sales and operations Mark Hewitt said.
“Of particular concern, however, is that first home buyer loans have fallen to unprecedented lows in places like New South Wales,” Mr Hewitt said.
“If this continues we are going to end up with a whole generation of renters,” he said.
Mortgages processed for first home buyers fell from its previous record low of 8.4 per cent of all home loans in September to just 7.2 per cent nationally.
First home buyer loans have declined each month since June this year when they represented 10.8 per cent of all home loans processed.
NSW continues to have the fewest first home loan borrowers (2.2 per cent), followed by Queensland (4.7 per cent), SA (7.3 per cent), Victoria (8.3 per cent) and WA (17.9 per cent).
If WA was to be removed from the equation, the average level of first-home buying on the eastern seaboard would be around five per cent – about a third of the long-term average.