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Rate hikes hit investor, refi volumes for major group

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James Mitchell 5 minute read

One of Australia’s largest mortgage broking groups has seen a slide in investor and refinance deals over the March quarter following a fresh round of bank rate hikes.

AFG’s latest Mortgage Index for the March 2017 quarter found that APRA-imposed lender policy changes have had an impact on both the investor market and refinancers as many lenders lift interest rates for borrowers.

“Lenders have been told by the regulator to rein in their exposure to the investor market and APRA continues to monitor growth in lending to investors,” AFG interim CEO David Bailey said.

“As a result, many lenders have embarked upon a series of rate increases and a tightening of credit policy for investors to comply with APRA’s guidelines,” he said.


“This activity has seen investor loans drop from 34 per cent to 32 per cent across the quarter.”

Meanwhile, those looking to refinance have also been impacted, with that segment of the market dropping from 38 per cent to 35 per cent last quarter – its lowest level since the third quarter of 2015, according to AFG.

In overall lodgement numbers, AFG has reported an 8 per cent lift on the third quarter last year, driven primarily by increasing activity of upgraders.

“With a significant amount of changes being made to the appetites and pricing of lenders, help from a mortgage broker can be vital for consumers trying to navigate the dynamic market that is home lending,” Mr Bailey said.

“A result that should please the regulators is a drop in the loan-to-value ratio (LVR) in all states apart from South Australia where a marginal increase of 0.4 per cent was evident. The national LVR is now down to 68.6 per cent, the lowest level since the first quarter of 2013.”


On a positive note, the major aggregator reported promising signs in the first home buyer (FHB) market as the 17-year-old FHOG scheme, introduced to offset the effect of the GST on home ownership, receives a shake-up.

“The Victorian state government has recently announced a number of changes to the scheme in that state and NSW is currently examining their options to help counter rising house prices in those states,” Mr Bailey said.

AFG data shows positive signs amongst the FHB market with lodgements lifting back up to 10 per cent for the first time since the first quarter of 2014.

“First home buyer numbers have been in the single digits for some time. It is good to see state governments looking to support those trying to get a foot on the property ladder,” Mr Bailey said.

“Time will tell if the proposed changes to the scheme go far enough to assist those looking to buy their first home in our two most populous states.”

[Related: Majority of brokers expect more out of cycle rate hikes]

Rate hikes hit investor, refi volumes for major group
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James Mitchell

James Mitchell

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.

He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.

James holds a BA (Hons) in English Literature and an MA in Journalism.



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