Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
SUBSCRIBE TO OUR NEWSLETTER SIGN UP
Powered by MOMENTUM MEDIA

RECEIVE BREAKING NEWS DIRECT TO YOUR INBOX EACH DAY

SUBSCRIBE

Must Read

AFG logo
October 10 2019 Aggregator co-founder resigns
A veteran of the mortgage broking industry and co-founder of a major aggregator has stepped down fro...
Robbie Fidler ta
October 10 2019 Lender appoints national broker manager
A non-bank lender has announced the appointment of a national broker channel manager to help bolster...
Sinead Taylor ta
October 1 2019 Bank MD steps down, replacement appointed
A non-major bank has appointed a new managing director after its current head announced his resignat...
RBA
October 1 2019 RBA drops cash rate to new low
The central bank has cut the official cash rate for the third time in five months.   ...
Rankings and reports

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

gw mackenzie small

Mortgage market overview- 2014

gw mackenzie small
Craig Mackenzie 3 minute read

RP Data's view is that we will see growth in dwelling values slow to more sustainable levels in 2014, and broadly in line with income growth. In my blog today, I’m setting out my expectations as to what this may mean for Australia’s mortgage market in 2014.

I believe that a strong employment market is critical to the health of the mortgage market in terms of both new originations and the performance of those mortgages. Whilst labour market conditions are expected to continue to soften in 2014 as we see fewer full time employment opportunities, unemployment remains low by both historical and international standards and is not expected to materially impact the mortgage market in 2014, absent some external shock to the economy.

Investors were an extremely large component of the mortgage market in 2014, attracted by lowinterest rates, robust capital growth expectations and uncertainty with respect to returns in equity markets. We expect investors to pull back in markets such as Sydney and Melbourne in 2014 as yields decline and turn their attention towards markets such as Brisbane where there are higher capital growth opportunities..

First-home buyers were largely absent from the key markets in 2013 as affordability constraints and strong investor appetite limited their ability to enter the market. We believe lending institutions will increasingly focus their attention on attracting more first home buyers into the property market in 2014,, particularly given the more limited State Government incentives and stamp duty concession programmes available.

Distribution channels Third-party distribution will continue to grow in 2014, although it appears to be stagnating in the 45% to 50% range. Lending institutions will increasingly explore online distribution capabilities and also further empower the retail network where applicable.

Advertisement
Advertisement

Refinancing We expect strong levels of refinancing activity in 2014, driven by continued low interest rates and incentives from lending institutions to attract new business. In contrast, lending institutions can be expected to place greater focus on retention initiatives.

Product We expect lending institutions to increasingly focus on product design and seek to address affordability issues for first home buyers. However that does not mean the return of the 100% mortgage, given the lessons learned from the GFC.. Nor for that matter do we see the significance of returning to a low doc lending environment. It will be interesting to watch the potential re-emergence of non-conforming lending, driven by increased funding availability and greater transparency potentially driven by comprehensive reporting.

Mortgage pricing is likely to remain very competitive in 2014 as lenders seek to achieve their growth objectives. Subtle differential pricing strategies may emerge in the market as lending institutions potentially look to use price levers to manage their new origination mix, particularly given strong investor and high LVR activity in late 2013.

Mortgage arrears Are unlikely to materially increase in 2014 given unemployment remains under control, interest rates are likely to remain low in 2014, the strong level of home price appreciation experienced over the past 18 months and the stronger lending appetite of lenders in the near prime and nonconforming space to take on those borrowers that may have encountered some difficulties in the past. The key point is that most borrowers are likely to have some options if they experience financial distress in 2014 as a result of the strong increase in home values in most markets over the past 18 months. Nevertheless, lenders will be keeping a close eye on those parts of the country that may experience labour market stress as a result of their reliance on employment in the automotive, manufacturing and supporting industries.

Regulation APRA will be keeping a close eye on lending standards in 2014, in particular the level and extent of new lending with loan to value ratios over 80%, which stood at 34.7% in the September 2013 quarter. Absent a material spike in that percentage in the last quarter of 2013 and/or first quarter of 2014, they are unlikely to impose any high LVR speed limits in 2014. In contrast, ASIC can be expected to increase their vigilance and enforcement activity in respect of responsible lending obligations assumed by both credit intermediaries and lending institutions

In summary, a strong year is expected for mortgage market in 2014, driven by continued low interest rates, strong consumer confidence and public expectations that properly values in markets such as Sydney, Melbourne and Brisbane will continue to rise in 2014. As always, consumer confidence and unemployment each remain critical to the ultimate performance of the market.

 

Mortgage market overview- 2014
gw mackenzie small
TheAdviser logo
gw mackenzie small
Craig Mackenzie

Craig Mackenzie

Craig Mackenzie is the executive general manager of commercial at CoreLogic RP Data.

FROM THE WEB

Latest Opinion

Linden Toll
Future-proofing your client after a business win
We reveal some top tips on how you can help ensure that your client’s big win is a blessing rather than a curse. ...
Scott Aggett
‘Best interest’ duty could be an opportunity, not a threat
With significant change on the horizon after the release of the proposed ‘best interests duty’ legislation, many mortgage brokers I work with are ...
Anthony Waldron2
Why we back brokers and you should too
NAB’s executive general manager of broker partnerships and chair of the Combined Industry Forum, Anthony Waldron, outlines the value of the broker ...
latest issue
The Adviser magazine latest issue
COVER STORY
The Adviser magazine latest issue
Broker of the future: The case for embracing technology

Technology is becoming an increasingly important area of investment for brokers as their jobs get more and more burdensome. Tas Bindi speaks to broking industry leaders about the tools they use to support and advance their business.

FEATURED ARTICLE
The Adviser magazine latest issue
Commercial & Business Loan Writers 2019

The Adviser’s Commercial & Business Writers 2019, sponsored by Thinktank, recognises the best-performing brokers in the commercial property and business lending sectors. Tas Bindi finds out how the leading brokers stay on top of their game.

The Adviser magazine latest issue
Making it on your own

Find out how Nathan Smith, owner of Sutherland Shire-based brokerage Birdie Wealth, battled through redundancy and established his own award-winning brokerage.

SUBSCRIBE TO THE ADVISER MAGAZINE TODAY!
The number one magazine for mortgage brokers
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target market reports to an audience of professional mortgage and finance brokers
order now