Property prices to remain flat

Mortgage market expected to grow by up to 5% in 2013

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Property prices are expected to remain either flat or grow by up to 5% into 2013, while the Australian mortgage market is set to grow 5% according to a new report from Deloitte.

The report also suggests that a key trend is continued de-leveraging by households – in other words, people are continuing to pay off their mortgage, rather than take on additional debt. That has resulted in many staying put in their existing homes, and not following the upgrade path to bigger and more expensive houses. That's one of the reasons why our building and construction sector is suffering its worst period in 20 years.

Related: Finally, some bank competition

The report notes that the problem for lenders is that growth in mortgages is slowing – something we here at the Motley Fool have highlighted as an issue for some time. As the report states, "The days of 10-15% per annum system growth in mortgage lending have passed and will not be returning soon".

Deloitte also note that the banks, including the big four of Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corporation (ASX: WBC) and National Australia Bank (ASX: NAB), will need to focus retention efforts on their existing valuable customers, while focusing on efficiency and controlling costs.

That means we are likely to see lower interest rates on deposits, and banks even less likely to pass on RBA cash rate deductions in full.

It is unlikely that we will see any solution to the competitiveness between major banks, smaller banks and non-bank lenders, says the report, suggesting the big four will maintain their dominance of the mortgage market. Because of their stronger credit ratings and size, the big four can borrow at cheaper rates and in larger amounts than their smaller competitors, which will continue to maintain the divide between the two groups.

The Foolish bottom line

Based on the report findings, its seems that 2013 will be a case of 'same-old, same-old', with only minor changes, if any to the mortgage market in Australia. The big four will likely use their subsidiary brands, like Bank of Melbourne, Bankwest and St George to protect their main brand and margins.

In the market for high yielding ASX shares? Get three "Rock-Solid Dividend Stocks" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »