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James Green, GM, Oxygen


While clearance rates have moved lower over the past couple of weeks.  One indicator has bucked the trend, mortgage applications.

One of the best forward indicators of the real estate market is mortgage applications. The latest data on mortgage application was release last week from Australian Finance Group (AFG). AFG is Australia’s largest mortgage broker. Established in 1994, the company now provides more than 20% of brokers nationwide.

The data release showed a kick-up in applications.  This increase was the first national

increase in over 3 months, up 12.5% over October 2010 and up 4.5% up on November 2009. In fact, this was the strongest November for the company since 2007.

Across Australia, mortgage sales in November grew by 25.7% in WA, 12.1% in NSW, 8.1% in Victoria, 6.5% in SA and 5.6% in QLD.

An interesting aspect of the data is it points to buyers coming off the sidelines and not refinancing due to the recent margin increases by the banks. 

Mark Hewitt, General Manager of Sales & Operations says: ‘November has traditionally been a strong month for mortgage sales. This year we didn’t see the usual spring uplift in the preceding months, and it’s possible that many buyers were sitting on their hands, waiting for greater certainty about the economy in general, and out of cycle rate rises in particular. Now that we’ve had the rate rise, more buyers seem to be coming off the fence.’

The strongest areas of growth for mortgage applications appear to be from Investors. Investors now account for 35% of all new applications.  This increase in investor appetite is seeing the revival of the investor sales strategies and financial market innovation, to market to this larger buyer base.  One emerging trend is the purchasing of property in a Self Managed Super Fund (SMSF). A recent media report even quoting 1 in 10 newly developed properties is now being purchased in SMSF.

First Home buyers are also showing signs of recovery from their lows in May/June 2010.  First Home buyers were 12% of the total market. However, still well below long term trading averages which are closer 20%.

Once these applications get approved most of these buyers will need to find a property. Therefore, indicating a good start for the market in the New Year.

 

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