Melbourne, Australia (PRWEB) April 23, 2013
Mortgage lenders facilitate the realisation of the Australian dream. Yet even they are not immune from the downturn the Australian economy has endured, leading to a drop in demand for home finance. The Mortgages industry in Australia has experienced high volatility since the onset of the financial crisis. During 2007-08, the industry grew robustly as a credit boom and strong conditions in the housing market underpinned demand for mortgages. During 2008-09 and 2009-10, revenue plunged as the global financial crisis led demand for credit to fall sharply and the housing market stalled. According to IBISWorld industry analyst Tim Stephen, “the industry rebounded strongly the following year, however, on the back of sharp cuts to interest rates, government support for the industry and pent-up demand for housing".
During 2012-13, the Mortgage industry's performance will be subdued as the slowing non-mining economy and weak consumer confidence weigh on demand for mortgages. “This is compounded by stagnant house prices that have resulted from the recent economic climate”, says Stephen. Renewed global financial instability and intensive competition in the industry are also expected to constrain growth. IBISWorld estimates industry revenue will increase at an annualised 1.1% over the five years through 2012-13. The industry displays a high level of concentration, with the four largest players – Commonwealth Bank of Australia, Westpac Banking Corporation, National Australia Bank Limited and Australia and New Zealand Banking Group Limited – accounting for a significant share of the market. Over the past two decades, industry concentration has been rising. The financial crisis accelerated the pace of concentration in this industry, as it forced the larger players to consolidate.
The next five years are expected to bring healthy growth as the strengthening economy and strong underlying demand for housing underpin growth in mortgages. Banks should also benefit from rising customer deposits and increased trading of covered bonds and residential mortgage-backed securities. However, profitability is expected to come under pressure from rising competition as banks and brokers vie for market share, while increased capital requirements under new banking reforms will increase funding costs. The industry's major threat remains a collapse in the housing market, but solid fundamentals and further forecast interest rate rises make this unlikely.
For more information, visit IBISWorld’s Mortgages report in Australia industry page.
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IBISWorld industry Report Key Topics
This industry comprises the mortgage lending activities of authorised deposit-taking institutions (ADIs). ADIs include banks, building societies and credit unions. A mortgage is a loan secured by real property. The features of a mortgage include loan size, maturity, interest rate and payment method. Loan size depends mostly on the value of the securing property. Mortgages can be refinanced to reflect property revaluations. The industry does not include mortgage brokers.
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About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.