While NSW and Queensland held their ground over the month, the national average was brought down by significant falls in mortgage sizes in Victoria and Western Australia, who shed 9% and respectively. In the face of mounting uncertainty over rising prices of day to day budgetary items, fixed loans exhibited somewhat of a resurgence, with 20.5% of all new home loans written by AFG brokers containing a fixed interest portion. NSW mortgage sizes grew largely as a function of increased activity in the prestige end of the market, notwithstanding fewer property transactions occurring, according to Malcolm Watkins, executive director of AFG. "People in NSW are making more prudent purchases. Less deals are being written, but we are seeing a flight to quality, where buyers are taking on properties that represent solid value, which will protect them from a future downturn," he said. WA, on the other hand has been dealt a much-needed wake up call, which will most certainly please the Reserve Bank of Australia, as it begins it deliberations over whether it should raise rates again in 2006, says Watkins. "The market is still very active in Perth, it's powering along well but I think this was a bit of a wake up call. Borrowers have started to exercise more caution, as the feeding frenzy wears off." Watkins believes that it's still too early to gauge the root cause of the Victorian mortgage malaise, but anecdotal evidence is pointing to increased prudence on the part of consumers who are presently struggling to balance household budgets.

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