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Loan size expands as confidence grows

10/08/2009

The average size of home loans expanded to a record $354,000 in July boosted by the rising confidence in the property market.

The latest data from Australia Finance Group (AFG) showed borrowers in NSW, Queensland and Victoria were the most willing to take on more debts as property prices in these states rebounded strongly over the past three months.

The average mortgage in NSW is now $407,000 and Victoria at $321,000. AFG said that while this is still lower than some of the peaks recorded in 2008, these numbers are the highest so far this year.

Home loans for investors rose for the third consecutive month to about a third (30%) of the total mortgages sold by the mortgage broker. However, first homebuyer activity continued to slow down from the highs in March this year, falling to 19.2% of all the home loans sold by AFG.

"We're seeing growing signs of confidence in the property market," said Mark Hewitt, general manager, sales and operations, AFG. "Recent reports of house price increases are stimulating the market as a while, and encouraging investors in particular."

There was also a dramatic shift towards standard variable rate loans despite talk of an imminent rate rise. The proportion of fixed rate loans sold fell to 5% in July while standard variable rates jumped to more than half (52.1%) in the same period.

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