Best interests: Pressure on operators to reduce mortgage rates has constrained revenue

The Mortgages industry has declined over the past five years due to low interest rates, falling housing prices since the middle of 2017-18 and tighter lending restrictions. While a lower cash rate typically benefits the industry through greater demand for mortgages and growth in housing prices, these benefits have been offset by declining interest income for lenders and the recent slowdown in property market. The RBA cut the cash rate two consecutive months in June 2019 and July 2019 to a historic low of 1.0%, which has driven revenue declines over the past five years. Industry revenue is expected to decrease at an annualised 1.1% over the five years through 2019-20, to $85.6 billion...read more.

Industry Statistics & Market Size
Revenue
$86bn
Annual Growth 15-20
-1.1%
Forecast Growth 20-25
Profit
Employment
177,318
Businesses
128

Industry Threats & Opportunities

  • The big four banks are facing competition from alternative finance providers and smaller banks
  • RBA cuts to the cash rate have placed banks under pressure to reduce borrowing costs for customers
  • Interest rates are forecast to increase as the economy strengthens, boosting industry revenue
  • Industry Report - Industry SWOT Analysis Chapter

    The Mortgages industry in Australia is in the mature stage of its life cycle. Industry value added, a measure of the industry's contribution to the wider economy, is forecast to grow at an annualised 0.1% over the 10 years through 2024-25. This trend represents an underperformance relative to the economy, with GDP projected to grow at an annualised 2.6% over the same period. This underperformance is characteristic of an industry in the mature phase of its economic life cycle.Growing pressure on major mortgage lenders to cut mortgages alongside RBA's cash rate cuts has put downward pressure on industry revenue. Alt...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
  • Financial Services Royal Commission
  • Stronger competition
  • Capital requirements
  • 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
  • Internal competition
  • External 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
    Includes:
  • Industry Revenue (2011-2025)
  • Industry Gross Product (2011-2025)
  • Establishments (2011-2025)
  • Businesses (2011-2025)
  • Employment (2011-2025)
  • Wages (2011-2025)
  • Total Assets (2011-2025)
  • Wages (2011-2025)
  • Purchases (2011-2025)
  • Profit (2011-2025)
  • Depreciation (2011-2025)
  • Rent (2011-2025)
  • Utilities (2011-2025)
  • Other (2011-2025)

  • 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, set by the Reserve Bank of Australia.
  • Four Pillars Policy
  • A Federal Government policy that ensures the four major banks operate separately by prohibiting any mergers and acquisitions among them.
  • Securitisation
  • 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 assess the structure of their capital to determine the financial strength of a bank.
  • What Our Customers Say

    Why buy this report?

    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.

    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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