Gloom and doom 'misleading' as 'green shoots' appearing in mortgage market

At a press conference in Sydney this morning, one major aggregator head talks first home buyers, fixed interest rates and says why he thinks things are looking up



‘Green shoots’ have broken through the frozen soil of the mortgage industry, Mortgage Choice CEO, Michael Russell, assured attendants to the aggregator’s financial review this morning.

Russell argues that media headlines have the tendency to mislead readers and says the broker's own data actually suggests a general uplift in the property market.

“You read the headlines published month by month on the level of housing finance put out by the ABS; they’re quite misleading. While there are some concerning trends in the volume of home loans being written, we haven’t had a month where the total value of new home loans written has gone below $20.5 billion…October was the highest since November, 2009. If you’d read a lot of the media, you wouldn’t realise the value of new home loans written is in the black.”


However, he said the number of first home buyers as a percentage of home loans written is an issue that ‘needs to be addressed’.  

“First home buyers as a percentage fell from 18.6% to 14.2% in December. This compares to 20.2% last December (2011) - that is a concern.”

He says the loss of first home buyer incentives in some states has had a decidedly negative effect.

“I don’t subscribe to the notion that the first home buyer grant has an inflationary effect, because it’s been around for a long, long time. I’m sure it’s being assessed at the moment…so there will need to be some action taken.”

Interestingly, Russell says lenders offering competitive new fixed rates has failed to have a serious impact on the aggregator’s business.

“Funding is becoming cheaper and…there’s no doubt about it that the fixed rate options are great, but we’re not seeing a shift in our fixed variable percentage.”

That said, Russell says he’s feeling optimistic for the first time in ‘a number of years’.

“I think there is no doubt that a couple of years ago, when people were talking about ‘green shoots’, it was premature. But, if you look at the dynamics of the housing market at the moment, there are some green shoots appearing. The January capital city housing prices are up for the year-on-year and its pleasing to see the Melbourne price number, while the only one down…was up for the month of January. Housing prices look to have bottomed and are gradually on the way up.”

Furthermore, Russell says consumer sentiment, which has suffered over the past several years, appears to be on the up.

“We’ve had 175 basis points taken off the cash rate and we’re only now seeing consumer sentiment finally take a significant leap forward – the highest for over two years.”

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