Looks like we're in a mortgage recession Australia!

Sales of mortgages continue to fall, prompting Australia's biggest mortgage broker to declare the nation is in a "mortgage recession".Australian Finance Group (AFG) says a count of mortgages brokered by its nationwide network fell sharply in June.The AFG Mortgage Index dropped 9.2 per cent to 5,939 mortgages in the month from in May, the company said.Over the year ended June sales fell 22 per cent, building on a 31.5 per cent fall in the May year.AFG, which has 10 per cent of the broking market, said its data showed that mortgages sales nationally had now had two successive quarters of negative growth.This suggested the market was in "mortgage recession", after sales fell from 23,143 at the end of the December quarter, to 20,543 in the March quarter and to 19,755 in the June quarter."We are calling it a mortgage recession," AFG general manager of sales and operations Mark Hewitt said."Interest rates are higher and the cost of money has risen because of the sub-prime crisis in the US, which has spread to the rest of the world."It means borrowers are really sitting on their hands and holding back in terms of major purchases like buying a home," Mr Hewitt told AAP.The 5,939 mortgages AFG sold in June totalled $2 billion, down from $2.6 billion a year ago.The Reserve Bank of Australia (RBA) has raised interest rates four times since August last year and the official rate now stands at 7.25 per cent, its highest in 12 years. At the same time, the commercial banks have raised their rates independently of the central bank, to offset their higher funding costs.Mr Hewitt said, with the RBA less likely to raise rates again this year, he was hopeful that the decline in mortgage sales had bottomed out."We're hopeful it has bottomed out or very close to bottoming out," he said."We're not forecasting anything but very modest growth over the next 12 months."The AFG data showed also that the average mortgage size increased by 7.5 per cent to $341,000 in June, from $317,000 a year ago.The biggest mortgage increases were in South Australia, which was up 13.5 per cent, and Queensland, up 11.7 per cent.New South Wales followed with mortgage size growth of 7.6 per cent, then Victoria with 6.1 per cent and South Australia with 2.6 per cent. Growth was steady in Western Australia.Mr Hewitt said the overall rise in the average mortgage size reflected bigger loans at the well-heeled end of the mortgage market."The upper end of the market is proving the most resilient - that is, buyers with significant equity in their homes and investment properties," he said."Many people who would normally be taking out smaller or medium size mortgages just can't afford to."AFG's figures showed also fewer people were taking out fixed rate loans, indicating most borrowers thought interest rates are likely to remain steady or fall.The proportion taking fixed loans fell to 11.5 per cent in June, from 13.7 per cent May.Demand for standard variable loans rose to 40.8 per cent, from 39.9 per cent.