New figures show Australians are continuing to use mortgage brokers, as the number of lodgements and average loan sizes creep up.
The quarterly AFG Mortgage Index figures saw total lodgement numbers for the last quarter were up by more than 4%.
The last quarter of the 2018 financial year finished at 28,896, up from 27,740 in the third quarter.
While the latest figures are lower than the first two quarters of FY18 the average loan value is the highest it has been at $504,901.
Total lodgement volume for the quarter increased on the previous quarter to $14,589,632,848.
AFG chief executive officer David Bailey said regulatory intervention in 2017 and tightened lending criteria appear to have established a structural change that may be the ‘new normal’ for the market.
He said, “Investors are sitting steady at 28% of lodgements, first home buyers have been at 13% for the past four consecutive quarters.
“Refinancers are at 22% and upgrader categories at 43% are also forming an established pattern.”
The research also shows mortgage holders are taking advantage of low interest rates to pay down the principal with P&I loans sitting at 81%.
The popularity of fixed rates has fallen with a drop to 15.5% for the quarter recorded, down from 26.4% in the first quarter of FY18.
Bailey added, “A sign that regulators will welcome is the drop in Loan to Value Ratios across the states, with the national LVR now at 67.9%.
“Another pleasing aspect of these figures is the fact that the gap between major and non-major lenders continues to shrink.
“Non-major growth across multiple categories, investors, refinancers and upgraders, suggest consumer comfort with looking outside of the big four for a lending proposition that meets their needs.
“Interest rate, loan features, fees and lender criteria are all key features for a consumer evaluating their options.
“A mortgage broker is uniquely placed to be able to efficiently and fairly compare the alternatives available across major and non-major lenders.
“As outlined in the ACCC Residential Mortgage Price Inquiry Interim Report1, discounting by the major banks is lacking in transparency and the time and effort required for a consumer to obtain interest rate comparisons and negotiate for a discount is very difficult.
“The presence of the mortgage broking channel is one of the few drivers of competitive tension in the Australian lending market.
“A consumer dealing directly with a lender has limited negotiating power or knowledge of the interest rates and lending criteria offered by competitors.
“A mortgage broker with access to a panel of lenders drives competition between lenders to the benefit of all consumers, not just their own clients.”
