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Market Report
Mortgages in Australia

  • Publication Date:January 2011
  • Publisher:Datamonitor
  • Product Type: Report
  • Pages:82

Market Report Mortgages in Australia

This report analyzes the Australian mortgage market, with a focus on key issues for mortgage providers. These include higher funding costs, a changing regulatory environment, and challenges to public perception.

Scope

  • The report uses statistical data as well as interviews with bank executives.
  • Provides discussion and analysis of several key issues facing Australian mortgage lenders.
  • Analyzes changes in the competitive environment for mortgages.
  • Discusses changing consumer preferences for mortgages.
  • Includes market share data of the major competitors.

Highlights

  • The regulatory changes will have profound effects on the mortgage broker channel. Because of economies of scale and the advantage of being able to more closely work with major lenders, there has been a trend of consolidation of mortgage brokers and aggregators over the last several years.
  • There are several indications that fee income from mortgages will come under even further pressure; housing affordability is at an all-time low, the online channel has the potential to provide easier price-comparison and switching, and the number of new lending commitments is forecasted to be relatively weak.
  • The difficulty of sourcing funds at a competitive rate has restricted the near-term ability for new entrants in the Australian mortgage market, as well as leaving smaller lenders hamstrung. In the short term, wholesale funding is expected to continue being tight according to industry analysts.

Reasons to Purchase

  • How has the mortgage market changed over the last year?
  • How have market shares and competitor positioning changed over the last year?
  • What developments are forecasted in the mortgage market and how can they be anticipated?
  • How can mortgage providers more effectively market their product?
  • How is the aftermath of the global financial crisis affecting the Australian mortgage market?
  • EXECUTIVE SUMMARY
    • Funding costs, regulations, and brand image are key issues for providers
    • Funding costs have increased and become less predictable
    • There are upcoming changes to the regulations regarding mortgages
    • The public perception of banks poses a challenge
    • The mortgage market in 2010 has been uncertain
    • Mortgages have grown smoothly over the last decade
    • Lending commitments have faltered in 2010 for several reasons
    • The composition of lending commitments has changed
    • The major banks continue jockeying for position
    • CBA and Westpac have come to dominate the market
    • Some financial institutions have grown their loan portfolios in 2010 despite a lackluster year
    • There are few substantial threats to the current bank dominance
  • OVERVIEW
    • Catalyst
    • Summary
  • FUNDING COSTS, REGULATIONS, AND BRAND IMAGE ARE KEY ISSUES FOR PROVIDERS
    • Regulatory changes are a key issue for mortgage providers
    • There have been recent changes to the regulations regarding mortgages
    • Regulatory changes impose compliance costs and can change the competitive landscape
    • Regulatory changes will benefit larger institutions
    • Funding costs have increased and become less predictable
    • Funding costs have increased as wholesale funding has become more expensive
    • Banks have become less reliant on short-term debt funding
    • Bank funding costs no longer follow the cash rate as closely
    • The public perception of banks poses a challenge
    • Rate rises above the RBA cash rate have caused a community backlash
    • Banks should strive to handle their public relations better
    • The global financial crisis has raised discussion regarding the role of the financial system
    • Mortgage fees may come under further pressure
  • THE MORTGAGE MARKET IN 2010 HAS BEEN UNCERTAIN
    • Mortgages have grown smoothly over the last decade, but several key factors have changed
    • Over the last five years outstanding mortgages have grown at a steady pace
    • Business lending has been much more affected by the crisis than residential mortgages
    • The proportion of mortgages held by investors has returned to around 30%
    • Banks' domination of credit aggregates has been hastened by the financial crisis
    • Securitization has been stagnant despite government support
    • Lending commitments have faltered in 2010 for several reasons
    • Total bank lending has slumped since
    • Mortgage lending commitments have slowed down in 2010 after a surprisingly active
    • The number of mortgage lending commitments has dropped
    • Affordability remains a key issue for consumers
    • The composition of lending commitments has changed
    • The surge of first-home buyers has ebbed away since its peak in
    • Investor activity has been muted in
    • Fixed rate loans remain unpopular due to a complex set of circumstances
    • Refinancing activity has rebounded somewhat in
  • THE MAJOR BANKS CONTINUE JOCKEYING FOR POSITION
    • The Australian mortgage market effectively now has three tiers of competitors
    • CBA and Westpac have come to dominate the market
    • ANZ and NAB are struggling to catch up, but lack acquisitive targets
    • All other lenders constitute a small fraction of the market
    • Some financial institutions have grown their loan portfolios in 2010, despite a lackluster year
    • Overall mortgages are forecasted to grow by 7% in
    • ANZ has achieved strong growth both for owner-occupier and investor loans
    • Bankwest and Bank of Queensland have achieved over-average growth
    • There are few substantial threats to the current bank dominance
    • Global liquidity constrains the ability for new entrants in the market
    • The financial crisis has illustrated how the larger Australian banks have an added institutional advantage
    • Government pledges to strengthen credit unions and regional banks are designed to challenge the majors
  • APPENDIX
    • Data tables
    • Methodology
    • Further reading
    • Ask the analyst
    • Datamonitor consulting
    • Disclaimer
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