Overview

Unfixed: Cuts to the cash rate cause revenue to decline, despite growing mortgage portfolios

IBISWorld’s Mortgages market research report offers insightful industry analysis and research into the market at the national level. IBISWorld’s in-depth industry market research is presented in a logical and consistent format. The industry report contains key industry statistics, market size, industry trends, and growth and profit forecasts for a 5-year outlook period.

REPORT SNAPSHOT

Industry Threats & Opportunities

  • The big four banks have grown their collective share of industry revenue to just over 78%
  • Industry assets have grown consistently due to a strong rise in residential housing prices
  • Interest rates are expected to increase as the economy strengthens, boosting industry revenue

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    Industry Analysis & Industry Trends

    The Mortgages industry has declined over the past five years on the back of consistent cash rate cuts during the period. While a lower cash rate can benefit the industry through greater demand for mortgages and growth in housing prices, it has been more than offset by the decline in interest income for lenders. Industry revenue is forecast to decline at an annualised 2.9% over the five years through 2016-17. The RBA left the cash rate unchanged between August 2013 and February 2015, and from May 2015 until May 2016, which provided a slight boost to industry revenue over the two years through 2015-16. However, another rate cut in August 2016 is expected to contribute to a 4.2% decline in industry revenue over the current year, to $78.1 billion...

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    Industry Report - Industry Investment Chapter

    The Mortgages industry exhibits low capital intensity due to the high focus on customer service. For every dollar paid as wages, an estimated $0.09 is spent on capital investments. As taking out a mortgage and purchasing a home is such an important decision for households, they prefer to deal with knowledgeable staff that are able to match their needs with the right type of mortgage product. This increases the level of employment that is required compared with capital, boosting the labour-intensive nature of the industry. A significant amount of administrative and processing tasks within the industry also require staff. Although the industry is increasingly using computer technology to reduce labour costs in these areas, wage expenses continue to far outweigh capital expenditure.

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    Additional Insights for the Mortgages Industry

    IBISWorld identifies 250 Key Success Factors for a business.The most important for the Mortgages Industry are

  • Economies of scale
  • Superior financial management and debt management
  • Management of a high quality asset portfolio
  • IBISWorld analysts also discuss how external factors such as Residential housing loan rates and Mortgage affordability in the Mortgages industry impact industry performance..

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    New Zealand Special Report

    Industry Products

    What is the Mortgages Industry?

    The Mortgages industry comprises the mortgage lending activities of authorised deposit-taking institutions (ADIs). ADIs include banks, building societies and credit unions. Industry revenue is generated through interest repayments and fees charged on mortgages. The industry does not include mortgage brokers.

    Industry Products
    Standard variable loans
    Basic variable loans
    Fixed-rate loans
    Line of credit
    Industry Activities
    Mortgage origination
    Mortgage refinancing

    Table of Contents

    About this Industry
    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry at a Glance
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Industry Performance
    Executive Summary
    Key External Drivers
  • Residential housing loan rates
  • Mortgage affordability
  • Ratio of interest payments to disposable income
  • Residential property yields

  • Current Performance
  • Residential property market
  • Rising competition
  • Capital requirements
  • Out-of-cycle rate hikes
  • Chart: Revenue Growth

  • Industry Outlook
  • Table: Mortgages Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - Mortgages Industry Lifecycle vs The Economy

  • Products & Markets
    Supply Chains
    Key Buying Industries
  • Residential Property Operators
  • Consumers

  • Key Selling Industries
  • Consumers
  • Financial and Insurance Services
  • Mortgage Brokers

  • Products & Services
  • Standard variable loans
  • Fixed-rate loans
  • Basic variable loans
  • Other
  • Line of credit
  • Chart: Mortgages Industry Products and Services Segmentation

  • Demand Determinants
    Major Markets
  • Residential owner-occupiers
  • Residential investors
  • Commercial investors
  • Chart: Major Market Segmentation for the Mortgages Industry

  • International Trade
    Business Locations
    Chart: Business Locations by State
    Competitive Landscape
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
  • Chart: Cost Structure Benchmarking – Sector vs Mortgages

  • Basis of Competition
  • Internal competition
  • External competition

  • Barriers to Entry
  • Table: Barrier to Entry Checklist for the Mortgages Industry

  • Industry Globalization
    Major Companies
    Commonwealth Bank of AustraliaWestpac Banking CorporationAustralia and New Zealand Banking Group LimitedNational Australia Bank Limited
  • Table: Commonwealth Bank of Australia - financial performance
  • Table: Westpac Banking Corporation - financial performance
  • Table: Australia and New Zealand Banking Group Limited - financial performance
  • Table: National Australia Bank Limited - financial performance

  • Operating Conditions
    Capital Intensity
  • Chart: Level of Capital Intensity for the Mortgages Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Key Statistics
    Table: Industry Data for the Mortgages Industry
    Includes:
  • Industry Revenue (2008-2022)
  • Industry Gross Product (2008-2022)
  • Establishments (2008-2022)
  • Businesses (2008-2022)
  • Employment (2008-2022)
  • Wages (2008-2022)
  • Total Assets (2008-2022)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    Jargon & Glossary
    Cash Rate
  • The rate at which banks lend funds to one another overnight. It is set by the Reserve Bank of Australia.
  • Four Pillars Policy
  • A legislative policy of the Federal Government that ensures the four major banks operate separately by prohibiting any mergers and acquisitions among them.
  • Net Interest Margin
  • The difference between the interest rate a bank charges on loans issued and that paid to customers depositing funds with the bank.
  • Securitisation
  • Involves the purchase of assets by a special purpose vehicle, which uses the asset's cash flows to service interest payments on asset-backed securities that have been sold to investors.
  • Tier One Capital
  • A means by which regulators measure the financial strength of a bank through assessing the structure of their capital.
  • Why buy this report?

    IBISWorld industry market research reports enable you to:
    • Find out about key industry trends
    • Identify threats and opportunities
    • Inform your decisions for marketing, strategy and planning
    • Quickly build competitive intelligence
    This report on Mortgages:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The Mortgages market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on Mortgages, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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