Property investors seizing opportunities in the current buyers' market has contributed to an 18.8% increase in mortgage sales during May.

According to AFG, Australia's largest mortgage broker, sales for this May have bounced back to within just 1.7% of last year's May figures after patchy sales results during the natural disaster-affected first quarter.

"Property investment has remained at consistent levels throughout the ups and downs of the property cycle, but strengthened significantly in May," said AFG general manager Mark Hewitt.

AFG's figures show that investors have been steadily more active in the market over the last few months, increasing their share of all mortgage sales by 2.6% between February and May. First home buyers' market share dropped by 1.4% over the same period.

"It is certainly a buyer's market right now, and investors looking at rising yields are probably better insulated from the impact of rising interest rates than other types of buyers," added Hewitt.

Victoria and New South Wales saw the biggest month on month upswings in mortgage volumes, increasing by 27.2% and 23.3% respectively. Both states also had the highest proportion of investment loans with 38.8% of loans in Victoria and 37.9% of those in New South Wales, processed for investors. May also saw a surprise increase of investment loans in Queensland, up to 36.5% - its highest such figure for well over a year.

The proportion of fixed rate loans rose slightly to 8.4% from 6.4% in April as more buyers chose to lock in rates.