Australian property investors and homebuyers went on a shopping spree in August, largely ignoring the August rate hike and the recent stock market volatility due to the US sub-prime crisis.
According to the latest figures from Australian Finance Group (AFG), mortgage sales rose a higher than expected 9% in August compared to a month ago. Investors led the charge, accounting for about a third (32.3%) of mortgages sold in the same period.
Punters in NSW and Victoria took out the highest number of mortgages with sales rising by 19% and 20% respectively, refuting the widely held view that these two markets would be hit hardest by a rate rise. Growing interest in South Australian properties pushed the average loan size through a record $255,000 in the same period.
Mark Hewitt, general manager of sales and operations for AFG said the recent rate rise has not yet tarnished property buyer interest despite all the doom and gloom of the past month. "What the figures clearly show is that property buyers are increasingly confident and that a quarter of a percent rate rise is not going to bring things to a shuddering halt," he said.
"We are also seeing that educated borrowers are increasingly using brokers to find the best deal, rather than simply accepting their own lender's terms. The publicity created by the sub-prime situation has resulted in a lot of people contacting a broker to review their positions."
The index also showed that while the sales of fixed rate loans rose by around 11% in the month of August to 18.3%, it is still well below the high of 25% seen in November 2006.
*Please note: all figures are reflective of the mortgage broking market and AFG results for August 2007