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A business analyst has claimed mortgages are a sector set to soar in the next 12 months.
A new report from business information analyst IBISWorld has identified the mortgage industry as one poised for strong growth in the year ahead. The company forecast 9.6% revenue growth for the industry for 2014-15,
and said a number of factors were set to drive growth in the year ahead.
"Over the past five years, mortgage lenders have significantly increased their residential mortgage portfolios in line with growth in demand for dwellings around the nation, particularly in the capital cities. IBISWorld has identified this increase as being driven by favourable lending conditions, declining interest rates and a suite of government assistance packages designed to help boost demand for residential property," the report said.
While demographic shifts in demand may be occurring, IBISWorld general manager Daniel Ruthven said demand for housing would remain strong in 2014-15.
"For many, the Australian dream of the quarter-acre block still exists. While most will be enjoying a smaller acreage, faith in owning a home remains strong across a broad range of Australian demographics, including new migrants and members of generation X trying to get into the property market," Ruthven
Though the mortgage market is predicted to outperform most other industries, IBISWorld predicted its growth would be outstripped by superannuation funds management services. The analyst forecast the sector to
increase by 10.5% over the next 12 months.
"Our expansive superannuation system is delivering strong returns for both holders and the funds themselves.
Compulsory contributions increased at the beginning of 2013-14, further driving the amount poured into superannuation. This has been coupled with strong returns in the financial markets over the past five years, bolstering consumer sentiment and allowing for some increase in the demand for investment options carrying
greater risk," Ruthven said.
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A new Fitch report shows arrears edged up slightly for March, rising to 1.35% from 1.24% at the end of September 2013. The ratings agency put the increase down to Christmas overspending, but said arrears were down 10bps on a year-on-year basis.
While Queensland was the worst performing state for arrears with a delinquency rate of 1.42%, Fitch said Victoria was the only state to see a year-on-year increase in delinquencies. Seven of the 20 worst performing suburbs in Australia were in Victoria, while no region in the state was among the best performing.
"Hume City, Victoria (VIC), continued to be the worst-performing region in Australia with a 30+ days delinquency rate of 2.93% at end-March 2014, the highest level since early 2008. Hume (VIC), Melton-Wyndham (VIC) and Northern Outer Melbourne continued to show a significant deterioration in mortgage performance and in the six months to March 2014 the delinquency rate in these regions increased on average by 59bp, compared with an average rise of 11bp nationally," Fitch said.
Budgewoi on the Central Coast of New South Wales was the worst performing postcode in the country, with a 30+ day arrears rate of 3.7%. The suburb has now been among the 20 worst postcodes each March and December for five years, with the exception of September 2012.