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MFAA Prosper : Mortgage and Finance Brief 13
Mortgage & Finance brief 23 2011 IsfIlEdIn ThE foldEr lAbEllEd ‘tricky.’ The Deloitte Mortgage Report predicts a ‘new normal’, with the 2012 environment being dictated by moderate growth, diversified and costly funding, consumer power and price wars, as well as raised lending and regulatory standards. System growth of 5% Q3 of 2011 saw an uptick in mortgage settlements, which demonstrates there is growth remaining in the sector – dependent on consumer confidence, property prices holding up, and interest rates remaining relatively low. Market growth of 5% will become ‘the new normal’, says Deloitte; meaning it will be a challenge for banks to achieve growth without taking market share from other providers. Funding costs to remain high External funding costs will remain at current levels or increase as global uncertainty continues. The result of this will be that banks and other lenders will be unlikely to see any relief on cost of funds; therefore will be in a difficult position balancing rate movements for borrowers while maintaining returns. price war to continue Good news for borrowers is that strong price discounting is set to remain in 2012. Major lenders need to balance the trade-off between market share and profitable growth and they will need to be careful to avoid a costly round of refinancing. Smaller lenders, however, will be less able to compete on price for any extended period. They are predicted to seek some ‘safe water’ in higher risk segments of the market, such as low-doc/non-conforming loans, or those loans with higher LVR. ••• online to gain strength The importance of the internet, social media and mobile apps will increase greatly over the next 12 months, with lenders in particular set to innovate and place the customer experience high on their agenda. The need for brokers to follow suit, and invest time in digital platforms, is great. Internet-based end-to-end lending will still not come of age this year, however it’s imperative for the industry to determine the strategy and streamline the process. the holy grail of mortgage lending: the cross-sell The cross selling of wealth and insurance products attached to the mortgage is predicted to be key in 2012. This requires lenders in particular to develop the current ‘ would you like insurance with that’ approach. Integration with planner operations, and the knowledge to give needs- based advice with the mortgage sale, is key. emerging themes in 2012 The key issues for the Australian mortgage market, as identified in Deloitte’s 2012 Mortgage Report. Information taken from Deloitte’s The Australian Mortgage Report 2012: A New Normal. Published November 2011. But whatof 2012
Mortgage and Finance Brief 12
Mortgage and Finance Brief 14