Victorian mortgage size increase surpasses NSW

According to the Australian Finance Group’s (AFG) Mortgage Index, the average loan size in Victoria has risen to $496,815, following a 3.2 per cent spike in the final quarter of 2017.

Over the year, the average loan size in Victoria increased by $20,385 (4.3 per cent), while average loan sizes in NSW increased by $10,662 (1.8 per cent).

“There has been a lot of focus on Sydney house prices, and therefore mortgage sizes, but homebuyers in Victoria are seeing the biggest increases,” AFG CEO David Bailey noted.

NSW, however, still boasts the highest average mortgage size of $613,084.

Further, average mortgage sizes in Queensland, South Australia, and the Northern Territory also rose over the year.

The average loan size in Queensland grew to $416,921 (up 3.4 per cent), while South Australia experienced an increase of 3.4 per cent to $390,706, and loan sizes in Northern Territory rose by 22 per cent to $469,502.

Average mortgage sizes in Western Australia; however, fell by -1.1 per cent to $439,944, which AFG attributed to “challenges” encountered by the state’s economy.

Average loan sizes grew by 2.8 per cent nationally in the same period.

Mr Bailey also noted changes to fixed rate demand, and a reduction in market share for major lenders.

“Fixed rate products have dropped back to 21.9 per cent of the market after a high of 26.5 per cent last quarter and First Home Buyers are sitting steady at 13 per cent for the second consecutive quarter,” Mr Bailey observed.

“What is noticeable is that the majors are continuing to lose ground to the non-majors, as borrowers increasingly look at alternatives to the major bank owned brands. The majors have 64.2 per cent of the market compared to the non-majors sitting at 35.8 per cent.”

The CEO also claimed that the impact of regulatory changes imposed on the industry had also been reflected in figures, but believes volumes are still “strong”.

“Whilst tightened lending criteria continues to impact the market, particularly with respect to refinancers, our overall volumes compared to prior year remain strong. Refinancers now represent just 22 per cent of the market.

“Investors have also been caught in the cross-hairs and have dropped to 28 per cent.”

Despite reduced demand from investors for loan products offered by major lenders, 69.6 per cent of first home buyers were opting to borrow a major bank.

Moreover, those looking to upsize made 44 per cent of overall lending volumes.

Mr Bailey also noted that borrowers are increasingly demanding the services of mortgage brokers to help them understand changing market conditions.

“Interest rate and lending policy changes have meant many clients are turning to their mortgage broker for help to understand what the changes may mean for them,” Mr Bailey commented.

“Individual circumstances are assessed differently by lenders, so having the insight into which lender may be the right fit for your needs is vital to a consumer looking for finance. A mortgage broker is uniquely placed to have that information.”

[Related: Confidence in NSW property market drops]