In The News: Home loan slump hits AFG staff

WEST Perth-based national mortgage aggregator, Australian Finance Group Ltd, has become the latest casualty of the downturn in home loan applications, laying off about 37 of its employees last week. Most were administrative staff based in Perth, with a handful working in sales at its east coast offices. AFG’s decision follows the release of its quarterly mortgage activity report last month, which showed sales in Western Australia fell every month for the first three months of the year, to be down 14.2 per cent overall, compared with the same period in 2007. Until this year, sales had not fallen for two consecutive months, compared with the previous year. AFG executive director national operations, Kevin Matthews, said the decision had been made to protect the business, as rising interest rates and the cost of credit affected demand. “We were gearing up to do $3 billion in applications over the last couple of years, and that number has dropped by 25 per cent. If you don’t do the capital, you don’t want to carry the overheads,” Mr Matthews said. The situation has become particularly acute over the past five months, according to AFG managing director, Brett McKeon. “Credit is down substantially around the country at the moment, with interest rates where they are, and consumer confidence is probably at nearly an all time low. As a consequence, people aren’t borrowing as much,” he said. “Having said that, we’re still lending about $2.5 billion a month, including commercial, and certainly the numbers are still pretty good.” AFG is making other adjustments to increase efficiency, bringing more of its business online through electronic lodgements. Yet there’s unlikely to be any upswing in demand until at least the end of the year, according to Mr Matthews. “Maybe the worst of the US sub prime crisis is over, but I think we’ll be in a high interest rate environment for some time,” he said. AFG is Australia’s largest mortgage wholesaler and has about 10.4 per cent of the WA market.

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