A strong year end for the mortgage industry
The last months of 2005 proved to be unpredictably strong for the mortgage industry, with lending values up in home mortgages and housing affordability rates showing a decrease for the first time. Home sales picked up in almost all regions, with Sydney recording an incredible 30% increase over sales figures from earlier in the year. With such a strong showing at the end of the year, the Housing Industry Association (HIA) has tentatively predicted that 2006 will be a banner year for the home lending industry.

What’s driving the momentum?
Experts posit that the recent increase in home lending strength is due to a combination of factors including:

• The return of first home buyers – Leading the industry surge is a phalanx of first home buyers that stayed away from the market for much of 2005. Renewed faith in the stability of interest rates, an increased awareness of the First Home Owner Grant and an overall rise in housing affordability has prompted many first home buyers to act on acquiring a home.

• Dropping house prices – While much of the year saw housing costs remain higher than normal, the end of the year brought a break in the market. Prices dropped in many regions making it possible for more people to afford a new home.

• Stable interest rates – The current stability of interest rates (and rumours of a potential drop) have created a buyer’s market for existing homes and have increased the demand for new home construction.

• Increasing incomes – A marginal increase in overall incomes across Australia is also considered to have contributed to the surge in real estate purchases. With more Australians feeling comfortable with their mortgage options, more homes are being bought.