First Home Buyers are returning to the market

11 November 2011

First Home Buyers are returning to the market in greater numbers than at any time since September 2009, according to mortgage broker AFG.

The monthly AFG Mortgage Index shows that First Home Buyers comprised 16.4 per cent of all loans processed - a 40 per cent increase for this buyer category compared to October 2010 when they comprised just 11.8 per cent of the mortgage market.

First Home Buyers were particularly active in NSW, where 21.1 per cent of home loans were arranged for them in October, as well as QLD (17.9 per cent) and WA (17.3 per cent).

More mortgage buyers opted for fixed rate loans in October than in any month since March 2008.

Fixed rate loans comprised 20.4 per cent of all home loans processed in October, dramatic growth considering they comprised only 7.9 per cent of home loans as recently as July 2011.

Mark Hewitt, General Manager of Sales and Operations at AFG said that buyers are reaping the benefits of one of the most competitive mortgage markets in years. "Discounted fixed rate loans appealed to all buyer types, but especially first home buyers and those looking to refinance", Hewitt said. "We have been slightly surprised with the popularity of fixed rates given it has been generally predicted variable rates would decrease and we would now expect the proportion of fixed rate loans to fall, following the cut in variable rates announced yesterday. "Non-major lenders are doing increasingly well in this environment and hopefully yesterday's news will further support a market recovery which is still in its very early stages", he added.

"Non-majors have seized more market share than at any time over the past twelve months, now comprising 21.1 per cent of all home loans.

"Their products are of particular appeal to first home buyers, where almost 30 per cent of the market is held by non majors, as well as buyers looking to refinance, where non majors account for a 21.2 per cent market share", Hewitt said.

Investment accounted for 35.6 per cent of all new mortgages, with investors especially active in NSW (39.2 per cent) and Vic (38.9 per cent) with lower levels of activity in QLD (32.9 per cent) WA (32.2 per cent) and SA (29.8 per cent).