Property investors appear to be taking advantage of softer market conditions, with mortgage sales rising 18.8 per cent in May.
According to the latest AFG Mortgage Index, total mortgage volumes for May totalled $2.5 billion – just 1.7 per cent lower than the figure recorded for May last year.
Victoria and New South Wales saw the biggest month on month upswings in mortgage volumes, increasing by 27.2 per cent and 23.3 per cent respectively.
Both states also had the highest proportion of investment loans with 38.8 per cent of loans in Victoria and 37.9 per cent of those in New South Wales, processed for investors.
May also saw a surprise increase of investment loans in Queensland, up to 36.5 per cent - its highest such figure for well over a year.
AFG general manager of sales and operations Mark Hewitt said while property investment has remained at consistent levels throughout the ups and downs of the property cycle, it strengthened significantly in May.
“It is certainly a buyer’s market right now, and investors looking at rising yields are probably better insulated from the impact of rising interest rates than other types of buyers,” he said.
Refinancing remained steady at 36.8 per cent despite higher levels of competition between lenders, and the abandoning of exit fees by many. It seems that many borrowers have adopted a long term view of their lender relationship, as encouraged by AFG.