Genworth Financial

Home Grown

Mortgage Industry Perspectives

November 2011

Cautious optimism for 2012

Online channel grows

Lenders are likely to be planning to grow their use of the online channel in 2012, with 65% planning to do so. Wholesale lenders and originators are the most likely to be planning to grow their use of online. In order to grow this channel, more than two thirds of all lenders surveyed are planning to invest in online distribution in the coming year.

While brokers are also looking to increase use of the online channel, they are slightly less likely to do so than lenders, with 58% of those surveyed intending to grow their use of online channels and 57% planning to invest in online distribution.

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Brokers more optimistic about 2012

In 2011, brokers are less likely to have seen an increase in lending than they were in 2010, when 57% of brokers surveyed said that volumes had increased over the past year. Despite the setbacks, brokers are optimistic, 57% expect some degree of increase in lending volumes in 2012 compared to 46% of lenders. Industry figures supported the view that the demand for brokers would continue to be strong going forward, and while noting that National Consumer Credit Protection Act (NCCP) may have increased the workload of brokers, they also indicated that it was a positive development for the industry as a whole, improving the professional image of brokers and quality of business.

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WA and QLD expect largest lending growth

While all states and territories have seen a similar pattern of change in lending commitments over the past three years, marked by a decline over 2010 followed by a slight recovery in 2011, there are also differences between the experiences of each state.

Between January and August 2011, Western Australia/Northern Territory saw the largest growth in number of lending commitments, at 10%, followed by Queensland at 8%. Victoria has seen more subdued growth over this period, of 4%, while New South Wales/Australian Capital Territory saw a slight (less than 1%) fall and South Australia/Tasmania fell 6%. Industry figures point out that there are also differences “town to town, city to city, suburb to suburb”, with the performance of different industries more relevant to the states’ economies than geographical differences.

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Lending growth slows in 2012.
Lenders expect difficult 2012.

The property market has been slow to grow over 2011, with first homebuyers (FHBs) seeing particular difficulty as affordability issues and the removal of stamp duty waiver incentives in some states were likely to continue to keep FHBs out of the market, and no lenders were expecting a great influx in FHBs over 2012. Investors are also expected to drop off.

Lenders expect 2012 to be a difficult year, mostly due to underemployment in the market. Other factors include tight financing conditions.

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What is Home Grown

Home Grown: Mortgage Industry Perspectives presents the findings of two comprehensive mortgage market research surveys of 200 people working for lending institutions and 300 brokers.

Conducted online in August and September 2011, the surveys also draw on face-to-face interviews with a number of leading industry figures. This research has been combined to create a comprehensive overview of the opinions of lenders, brokers and industry figures towards the mortgage market in terms of lending volumes, changes within the market, borrower hardship and the outlook for lending.

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