Investors registered the highest share of mortgage volumes last month at 35.8 per cent, eclipsing refinancing at 34.8 per cent - which is at the lowest level since September 2009.
"We're not seeing a surge of confidence sweep across the country, but different categories of borrowers in different states are feeling more comfortable about taking on loans," AFG general manager of operations Mark Hewitt said.
"New South Wales is by far the most popular state for investors, while WA is leading the way for first home buyers," Mr Hewitt said.
In New South Wales, loans for investors comprised 43.1 per cent of all new loans, compared with 35.1 per cent in Queensland, 33.6 per cent in Victoria, 32.2 per cent in South Australia and 29.9 per cent in Western Australia.
In Western Australia, loans for first home buyers comprised 25.2 per cent of all new loans, compared with 18.3 per cent in Victoria. 15 per cent in Queensland, 12.8 per cent in South Australia and 5.7 per cent in New South Wales.
One in five new borrowers chose to fix their loans (20.8 per cent), down from 21.5 per cent the previous month.
Loan-to-value ratios (LVRs), which are new loans stated as a percentage of property values, rose to 70.5 per cent, the highest level since September 2009. Higher LVRs typically signal increased first home buyer activity and/or increased confidence among borrowers.
AFG, Australia's largest mortgage broker with a loan book of over $65 billion, also confirmed that the solid October result was the highest the group has registered in any one month since March 2009.
October volumes are generally lower than those for September, but AFG's October figures bucked the trend being 14.6 per cent higher than the previous month. The volume was also almost a quarter greater than that for October 2011.
