Mortgage sales surge to "unprecedented levels"

If there was any lingering suspicion that property prices are falling, today's release from AFG nails them.

There tends to be a time lag between interest rate cuts and a measurable response from the property markets, but the effects of monetary policy easing are clearly starting to flow through.

Interestingly the boom in sales was seen across WA, VIC, NSW, SA and QLD and there is evidence that first homebuyers (FHB) are returning to the market as hoped.

There was a huge increase in FHB mortgage sales in WA. 

Victoria will instead show a false peak in the next month before the expiry of its FHB grant.

Australia's largest mortgage broker AFG reports a huge boom in mortgage sales from February through to May:

"AFG, Australia's largest mortgage broker, processed over $3.6 billion in mortgages last month - an increase of nearly 13% from an already record-breaking April figure of $3.2 billion.

AFG has 10% of the national mortgage market (Source: AFG and ABS data) and the indicative trends of its figures are typically confirmed by definitive ABS data six weeks later.

Demand for mortgages rose most strongly in WA, where mortgages processed increased by 17.7% over April, followed by Victoria (+14.6%), NSW (+10.9%), SA (+8.6%) and QLD (+7.2%).

Demand rose consistently across all buyer types - first home buyers, investors and borrowers looking to refinance."

AFG's total finance commitments are now up by close to 50% on their 2009 levels. This will likely translate to strong housing finance figures for May from the ABS in due course.

Source: AFG