The number of people borrowing more than $500,000 to purchase property rose by an average of 13 per cent nationwide over the past 12 months, says leading mortgage broker Loan Market.
Loan Market Chief Operating Officer Dean Rushton said the increase occurred in all mainland state capitals with Melbourne having the biggest rise of 21 per cent.
Mr Rushton said analysis provided for Loan Market by property information service PriceFinder found residential real estate price increases only partially contributed to the significant shift in home loan size.
“A higher proportion of first home buyer activity during 2009 due to the boosted Government First Home Owner Grant and a more subdued top end market were factors which resulted in pushing people into higher home price and loan brackets,” he said.
“The Melbourne housing market experienced the biggest shift with a 21 per cent increase in people taking loans of more than $500,000 over the 12 months to July, 2010.”
Mr Rushton said the Brisbane region had an 18 per cent increase in home loans of more than $500,000.
He said in Sydney there was a 16 per cent rise while there was only a seven per cent shift in Adelaide and four per cent in Perth.
“Sydney has the lowest percentage of loans below $500,000 at 28 per cent while Adelaide has the highest at 66 per cent and appears to be one of Australia’s most affordable cities to buy a home,” he said.
“In Brisbane, 47 per cent of loans are below $500,000 compared to 65 per cent a year ago while in Perth its 50 per cent and Melbourne 31 per cent.
“In Melbourne in July, 2009, 52 per cent of loans were below $500,000 so the change there reflects the strength of the property market in metropolitan Melbourne since early last year.”
Mr Rushton said the six increases in official interest rates by the Reserve Bank of Australia between October, 2009, and May this year were mostly absorbed by the market.
“During the research period the cash rate dropped to a near 50-year of 3.0 per cent so it took some time before the RBA’s increases started to subdue activity,” he said.
“However the central bank should carefully consider the impact future rate rises may have on those who have increased their borrowings over the past 12 months.”