The mortgage market is facing difficult times, with housing affordability reaching record lows. The current global economic uncertainty is exacerbating this situation. This report analyzes these trends and provides recommendation for providers.
This report analyzes the outlook for the Australian property and mortgage markets. The report breaks down the market in terms of different customer segments, analyzes current trends, and forecasts future developments. Action points for mortgage providers are also included.Provides an in-depth discussion of the outlook for Australian mortgagesAnalyzes drivers of growth for different mortgage customer target segmentsDiscusses both long-term and short-term trends and advises how providers should anticipate these trendsUses a consumer survey of almost 2,000 Australians aged 18 and aboveAs a proportion of new lending commitments, first home buyer lending has fallen sharply since 2009. Between 2002 and 2009, first home buyers generally accounted for around 23% of monthly lending commitments. In March 2011, only 12% of lending commitments were for first time buyers.More theoretically, the value of an investment property should be equal to the sum of all future discounted net rental income, with the discount rate being proportionate to the expected risk of the investment. This is analogous to how the value of a share is defined as the sum of all future discounted dividends.There are some segments that will still be active in the forecasted upcoming subdued market. Refinancers will drive an increasing proportion of lending commitments. Downsizers and upgraders are also expected to account for a larger proportion of the market activity.What is the medium term outlook for the mortgage market, and why?Which segments will perfrom better than others?How should providers of mortgages target customers, and what should be the key points to consider when acquiring customers in these times?What proportion of mortgagors are experiencing financial stress, and how are the stressed mortgagors reacting?