Annual survey gives Australian mortgage market a clean bill of health

Consumers and industry professionals rate Australia's mortgage market positively, according to a Genworth survey released today.

However, the survey did point to declining first home buyer loans, according to Bridget Sakr, Genworth chief commercial officer.

"While the overall health of the market was seen as good, the survey suggested that first home buyers comprise 10.5% of all lender originated loans and 18.9% of all broker originated loans which supports arguments that this group is finding it increasingly difficult to enter the housing market," said Sakr.

The Genworth survey suggested first home buyers are almost twice as likely to use an intermediary like a broker, rather than directly approaching a lender, than other borrowers.

Although the market overall was rated highly, 36% of consumers surveyed were concerned about consumer housing debt, while lenders surveyed were less concerned.

"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 home buyers highlight the value of low deposit options such as Lenders Mortgage Insurance," said Sakr.

Supermarkets were seen as the market players with the most potential to influence Australia's mortgage industry.

"In last year's research, lenders felt that online operators and superannuation funds were most likely to have the largest impact on the market," Sakr noted.

"In 2014 we have seen a change in this situation, with 37% 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," she said.

The majority of respondents also believed the current overnight cash rate of 2.5% is appropriate, with the cash rate, government policy and lender funding mix seen as having the greatest influence on the state of the mortgage market.

"Lenders and brokers agreed that APRA's [Australian Prudential  Regulation Authority] current regulatory position strikes the right balance between responsible lending and access to housing credit," said 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," she said.

More than 1,200 respondents were surveyed for the 2014 Home Grown: Mortgage Industry Perspectives report.