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Genworth Survey: Australian Mortgage Market in Good Health

Genworth’s annual survey of the Australian mortgage market has shown that participants rate the overall health of the mortgage market positively and believe that supermarkets and online operators could have the largest impact on the sector.

The 2014 Home Grown: Mortgage Industry Perspectivesreport provides unique insights into the health and sustainability of the mortgage market via in-depth analysis of a series of online surveys, group workshops and one-on-one interviews, involving over 1,200 consumers and industry professionals.

“By canvassing the opinions of lenders, brokers and consumers we are able to generate an exclusive 360 degree view of the market and identify different perspectives,” said Genworth Chief Commercial Officer, Bridget Sakr.

“While the overall health of the market was seen as good, the survey suggested that first homebuyers comprise 10.5 per cent of all lender originated loans and 18.9 per cent of all broker originated loans which supports arguments that this group is finding it increasingly difficult to enter the housing market.

“In last year’s research, lenders felt that online operators and superannuation funds were most likely to have the largest impact on the market,” said Bridget Sakr.

“In 2014 we have seen a change in this situation, with 37 per cent of lenders now believing that market entry by supermarket groups would most likely have the largest impact on the market while at the same time downgrading the potential influence of online competitors and superannuation funds,” said Bridget Sakr.

Australia is one of the few markets to successfully utilise the broker distribution model and 61 per cent of participants expect the broker channel to continue growing in volume over the next five years, compared to 52 per cent in 2013.

The research also suggested that first homebuyers are almost twice as likely to apply for a mortgage through an intermediary rather than directly through a lender.

There was almost universal support that the cash rate is at the appropriate setting. The cash rate, lender funding mix, and government policy were identified as the most influential drivers of mortgage market health.

“Lenders and brokers agreed that APRA’s current regulatory position strikes the right balance between responsible lending and access to housing credit,” said Bridget Sakr.

“They also believe that current levels of consumer debt are not a cause for concern.

“While it is acknowledged that rate rises or a correction in property prices could change this assessment, industry experts predict stable interest rates over the next year and believe that factors such as population growth and supply constraints may put a floor underneath property prices over the short term,” said Bridget Sakr.

Surveyed consumers were the group most concerned about consumer housing debt, with 36 per cent believing that it was a cause for concern.

“While our Home Grown report suggests that the market is in good health, characterised by robust competition and a supportive cash rate setting, concerns around market access for first homebuyers highlight the value of low deposit options such as Lenders Mortgage Insurance,” said Bridget Sakr.

A copy of the full report can be found at genworth.com.au/homegrownedition5/

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