Increased confidence pushes average mortgage size up: AFG

The average new mortgage lodged in Australia reached a record high of $354,000 in July, indicating a growing confidence in the property market.

AFG's Mortgage Index shows mortgage sizes have been growing since May this year after reaching a low of $339,000 in January 2009. The data also shows borrowers in NSW, Qld and Vic are the most willing to take on greater debt. The average loan sizes in each of those states is $407,000, $339,000 and $321,000 respectively.

Meanwhile, the popularity of fixed rate mortgages appears to have fallen swiftly. The index shows that the number of fixed rate mortgages fell from 8.3% in June to 5% in July 2009, indicating that many borrowers may feel they've "missed the boat" in locking in low rates.

Mark Hewitt, AFG's general manager sales and operations said each week the country is seeing growing signs of confidence in the property market.

"Recent reports of house price increases are stimulating the market as a whole, and encouraging investors in particular. That said, because interest rates remain at 40-year lows, we'd encourage buyers to take into account the fact that their mortgages will almost certainly cost more to service as the overall economy picks up," said

Activity from investors remains strong, with 30% of all activity coming from that section, while first home buyers make up 19% of the mortgage market.