Safe as houses: Strong growth in mortgages outstanding has boosted industry revenue

The Mortgages industry’s revenue has increased marginally over the past five years due to strong growth in mortgages outstanding. The historically low cash rate over the period has further increased demand for mortgages while inflating housing prices. As the cash rate has fallen over the past five years, the major banks have increasingly introduced out-of-cycle interest rate rises. Consequently, industry revenue is expected to increase at an annualised 0.2% over the five years through 2018-19, to $83.5 billion. This includes an anticipated decline of 0.4% in the current year, largely due to an increase in residential property yields. The RBA left the cash rate unchanged between August 2013 and February 2015, and from May 2015 to May 2016, providing a slight boost to industry more.

Industry Statistics & Market Size
Annual Growth 14-19
Forecast Growth 19-24

Industry Threats & Opportunities

  • The big four banks account for over 70% of the Mortgages industry's revenue
  • Industry assets have grown consistently due to a strong rise in residential housing prices
  • Interest rates are forecast to increase as the economy strengthens, boosting industry revenue
  • Industry Report - Industry Analysis Chapter

    A persistent theme in the Mortgages industry over the past five years has been falling interest rates offsetting growth in mortgage portfolios. The total value of mortgages outstanding is expected to grow at an annualised 5.6% over the five years through 2018-19, to $2.0 trillion. However, the RBA has consistently cut the cash rate over the past five years as part of its monetary expansion program, reducing interest income for lenders.The industry entered a difficult period in 2012-13. Concerns about Australia’s two-speed economy persisted, and credit demand remained subdued. Non-mining elements of the economy were weak, as a strong Australian dollar and uncertainty surrounding global economic growth weighed on business confidence and export-oriented industries. The...purchase to read more.

    Additional Insights for the Mortgages Industry

    IBISWorld has determined the most important Key Success Factors for the Mortgages 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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    What's in this report

    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
  • Other loans
  • Industry Activities
  • Mortgage origination
  • Mortgage refinancing
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    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
  • Stronger growth
  • First-home buyers versus investors
  • APRA and monetary policy
  • Table: Mortgages Industry Revenue Outlook

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

  • 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 loans
  • 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
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
  • Chart: Cost Structure Benchmarking – Sector vs Mortgages

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

  • Industry Globalization
    Commonwealth Bank of Australia, Westpac Banking Corporation, Australia and New Zealand Banking Group Limited, National 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

  • 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
    Table: Industry Data for the Mortgages Industry
  • Industry Revenue (2010-2024)
  • Industry Gross Product (2010-2024)
  • Establishments (2010-2024)
  • Businesses (2010-2024)
  • Employment (2010-2024)
  • Wages (2010-2024)
  • Total Assets (2010-2024)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    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.
  • 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 1 Capital
  • A means by which regulators measure the financial strength of a bank through assessing the structure of their capital.
  • What Our Customers Say

    Why buy this report?

    IBISWorld’s Mortgages market research report can be used to help you: understand market size and growth potential; major companies; draft business plans and pitch books; and conduct benchmarking and SWOT analysis. Our industry analysis highlights macro industry trends in the overall sector and micro trends faced by companies that do business in the industry. The industry report also provides key industry statistics and 5-year forecasts to anticipate future industry prospects so you can decide with confidence.

    IBISWorld industry market research reports enable you to:
    • Find out about key industry trends
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    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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