The latest AFG Mortgage Index has revealed that investor mortgage demand retreated significantly over the final quarter of 2015.

The latest figures show investor lending had fallen from 40 per cent of total loans processed early in the calendar year to 31 per cent in the last quarter.

Meanwhile, gains in both refinancing (36 per cent to 38 per cent of total loans) and upgrader (30 per cent to 35 per cent) categories led to a 7.0 per cent lift to $13.8 billion in loans processed by AFG for the December quarter compared to the same lending period in 2014.

AFG saw upward swings in Victoria of 17.69 per cent and New South Wales at 12.23 per cent with a surge in South Australia of 13.41 per cent.

However, Queensland was flat at 0.85 per cent while the Northern Territory saw a 21.7 per cent decline. WA also experienced a 9.55 per cent dip, reflecting a cooling housing market in the state.

AFG general manager of sales and operations Mark Hewitt said 2015 was a year of adjustment for both borrowers and lenders.

“A shift in requirements for lenders set down by regulators saw many changes to lending policy and interest rates resulting in a level of confusion amongst borrowers. This has made the role of the broker even more important for Australians looking to buy homes,” Mr Hewitt said.

“As foreshadowed by AFG’s Competition Index late last month, the number of people keen to fix their loans is on the rise,” he said. “A long period of low interest rates has many people predicting an upward swing may be on its way in 2016.”

Fixed rate lending lifted by nearly 3.0 per cent to 14.2 per cent of AFG’s product mix in the final months of 2015. This figure, as a percentage of AFG’s overall volume, saw its first increase since the final quarter of 2013.

[Related: Brokers turn to white-label for investor loan solutions]

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