Refinancing is dominating the mortgage market, with new data showing two in five new mortgages in June were arranged for borrowers choosing to refinance.
According to the latest AFG Mortgage Index, 39.1 per cent of borrowers refinanced their home loans – a 12 month high.
At the same time, the popularity of fixed rate home loans has fallen to its lowest point since September last year.
Fixed rate loans peaked at 25.4 per cent of all home loans arranged in March this year – the highest such level AFG has ever recorded.
Since then, there has been a steady decrease in borrowers looking to fix rates, and in June 16.5 per cent opted for a fixed rate mortgage.
AFG’s general manager of sales and operations Mark Hewitt said refinancing is very strong as borrowers take advantage of a more competitive market to secure a better deal.
“It’s significant that, as we begin a new financial year, the vast majority of borrowers are opting not to lock in an interest rate. Most see a period of stable or even softer rates for the foreseeable future,” he said.
The AFG Mortgage Index shows that despite economic volatility of the past 12 months, the national mortgage market has been remarkably consistent in a number of respects.
The average mortgage size rose 2.3 per cent over the year, from $384,000 to $393,000, property investment held steady at just over one third of all new mortgages processed, and there was a slight increase in the proportion of first home buyers from 13 per cent to 15.6 per cent.