The average home loan size in Australia was up to $318,000 in May, an increase of 3.6% from the April figure according to mortgage brokerage AFG.

The jump of $11,000 represents the largest monthly increase in the average home loan size recorded by AFG during the past three years.

Queensland became the third state where the average home loan costs more than $300,000, as it increased from $288,000 in April to $302,000 in May. The state joins NSW and Western Australia, where an average home loan costs $382,000 and $359,000 respectively.

Mark Hewitt, general manager of sales and operations at AFG, said: "We've seen a lot of confidence returning to the markets of the eastern states during the past few months, but even so, this figure took us by surprise."

Hewitt said the market is almost unrecognisable from the back half of last year. 

"Between July and December last year, the average new home loan fell from $306,000 to $300,000, as prices stagnated and cautious buyers took care not to over-extend themselves. January to May 2007 has seen a swing in the opposite direction, from $301,000 in January to $318,000 last month."

AFG sold 9,762 loans totalling $3,108bn in May 2007, at an average size of $318,000. This compares to 7,628 loans totalling $2,345bn in April 2007, at an average size of $307,000.

The majority of those loans were standard variable (37.7%), while 20% were basic variable and 20% fixed loans.

AFG lent 71% of property value on average in Victoria, 69% in NSW and 67% in Queensland. The loans averaged just 56.8% of property values in WA.

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