Best Month in Five Years for Mortgage Broker AFG
Buoyed by an influx of first-time home buyers, Australian Financial Group (AFG) has reported its best month in five years, processing $2.7 billion in mortgages for the month of July. That figure equalled the previous high, set in July 2007, and represented a 20% increase over mortgages processed in July 2011.
According to AFG, first-time buyers accounted for 17.6% of the July market, a significant increase from their 15.6% share in June and the highest share recorded since August 2010. First-time buyers were not evenly distributed throughout Australia, however. They represented 22.7% of the market in Western Australia and 21.7% in Victoria, but only 14.4% in New South Wales, 13.8% in Queensland and only 9.6% in South Australia.
Loan-to-value ratios reflected the first-time-buyer trend, increasing from 66.9% in June to 67.7% in July, consistent with the tendency of new buyers to borrow a greater proportion of property value. July also saw a corresponding increase in the proportion of introductory loans, which jumped from the previous month’s 2.9% to 5.4%.
AFG attributed the changes to a combination of market trends. ''Low interest rates, soft property prices and escalating rents create a powerful cocktail of incentives to get people into the property market,” according to General Manager of Sales and Operations Mark Hewitt.
The company also reported that variable rates continued to outnumber fixed rates by a wide margin, with fixed-rate loans accounting for only 16% of the market. In the refinance market, non-majors lenders increased their share from 22.9% in June to 26.7% in July.
AFG, which claims 20% of the brokerage market in mortgages, reports that its business grew some 30% in its last fiscal year and that it plans to build on that growth. Malcolm Watkins, AFG Executive Director, has announced that the company plans to list its shares on the market and that an IPO steering committee is already in place. “We will list in the first quarter of next year,” he said.
AFG has also announced that it is in the process of expanding its offerings beyond mortgage brokerage, moving into insurance and other financial services, and that it has enhanced the training of its 2500 brokers to prepare them for the company’s coming metamorphosis into a full-service financial entity.