Tuesday, March 8, 2011

AFG Mortgage Statistics - February Bounce

AFG's monthly mortgage statistics are out, February rolled in with $2,053M in mortgages written, which consisted of 5,365 loans and an average loan size of $382,000 ($17,000 higher than last months average loan size). This may look like quite a bounce from the January figures, but in comparison to previous February's the figure is extremely poor.

February 2008 -> $2,438M
February 2009 -> $2,674M
February 2010 -> $2,275M
February 2011 -> $2,053M

Further to this the trend is still obvious. I expect we will see another short term peak in March (likely lower than the November 2010 peak of $2,511M) and then a drop into the middle of the year as the market slows again.

There were some interesting comments from AFG on the figures:
In addition, the AFG Mortgage Index shows that Loan to Value Ratios (LVRs), the value of loans expressed as a percentage of the value of properties, fell to 53.2% in February. This is the most conservative LVR figure AFG has recorded in six years, showing that mortgage buyers borrowed only around half the value of the properties they were buying or refinancing. LVR figures in the long term have tended to be around mid 60%.
Lower LVRs, fewer buyers, fewer loans, with more properties for sale... sounds like a recipe for disaster.
Overall mortgage sales for February showed that recovery from the summer of disasters has yet to occur, with the $2,053 million of loans processed down 9.7% on February 2010 ($2,275 million). New South Wales was the only state to show a modest increase on February 2010’s figures (2.7%), with mortgage volumes in other states falling by 8.1% in Victoria, 8.8% in Western Australia, 16.3% in Queensland and 22.9% in South Australia compared to February 2010.
How could we forget, AFG decided last month that the natural disasters were to blame for the poor lending statistics. They continue to blame the disasters, yet the greatest fall in mortgage volumes was South Australia! Are they really expecting readers to believe that the huge drop in SA lending was the result of floods and a cyclone in other states?

It could still be a couple of months before the public wakes up and realises that this is not a temporary slow down, but the start of a significant correction in the housing market which could last for years...


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