Mortgage stress has halved - only 2% of homeowners behind on repayments - Genworth; Interest rates have virtually disappeared as a source of mortgage stress
Tweet Topic Started: 20 Sep 2014, 12:13 AM (3,081 Views)
Genworth’s Homebuyer Confidence Index has risen 7.3 points in September, largely as a result of low interest rates reducing mortgage stress.
First home buyers that purchased over the past 12 months were significant contributors to the lift in confidence, at a high not reported since September 2012, while mortgage stress in general is significantly lower.
In fact, the index recorded that mortgage stress experienced by home owners has almost halved – falling to 15% in September from 28% in March.
Meanwhile, 2% of home owners were reported as behind their mortgage repayments, compared to the three year average of more than 3%.
Genworth Australia chief commercial officer Bridget Sakr said that they suspect the increase in confidence is a result of 13 months of historically low interest rates, as well as increased certainty around the May federal budget and the health of the economy.
“Almost half of surveyed home owners said they increased their mortgage buffer by making overpayments during the past 12 months,” said Sakr.
“Interest rates have virtually disappeared as a source of mortgage stress with just three per cent of struggling homeowners now citing this as a key factor of mortgage stress compared to 50% in September 2011.”
However, the Index also found a slightly increase in those who did not believe now was the time to buy, mirroring the results found by the Westpac Melbourne Institute Index of Consumer Sentiment.
Sakr said this is potentially a result from an increase in property prices.
“While the Genworth Homebuyer Confidence Index has returned to a positive result overall, dwelling value growth of late and the ongoing challenge of saving a deposit means that many prospective first homebuyers are still finding it difficult to enter the property market,” she said.
The index is a survey of more than 2,000 Australians, which asks about the proportion of monthly income used to service debt, comfort levels around LVRs, repayment over the past 12 months and future 12 month expectations.
Complete nonsense - just doubled my short position with these guys.
Was funny hearing the Kouk flap his wings earlier this week to say that the big4's share price falls over the previous week were due to the housing market heading into a correction - I think on the same day Genworth's share price jumped 2%.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness. "Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
Complete nonsense - just doubled my short position with these guys.
Was funny hearing the Kouk flap his wings earlier this week to say that the big4's share price falls over the previous week were due to the housing market heading into a correction - I think on the same day Genworth's share price jumped 2%.
I wouldn't short Genworth.
But I can't say that I agree with the Kouk either. I think that investors are concerned that the big four will have to top up their Tier 1 Capital ratios and so reduce the dividends payable.
I can't see raw profits falling, the loan book is accumulated over many years, it's not something that they will write this year, but some of those profits will go into their shareholder reserves and not into shareholders pockets. Not lost, but they can't spend it either.
Any expressed market opinion is my own and is not to be taken as financial advice
FHB loan size at its highest ever point at $307,400
And yet 35 % have 10% deposit or less.
So a third of FTBs have a deposit of , on average 30k.
Hmmmmm....
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
True, and a loan of $307,000 is incredibly easy with two reasonable wages coming in.
There seems to be this over emphasis on LVRs as opposed to serviceability.
Tell me which is better, somebody who has saved a twenty five percent deposit but who will need to contribute say 40 percent of their income to service the loan or somebody with a ten percent deposit who will need to contribute 30 percent of their income to service the loan?
Somebody better tell first home buyers all this because they don't appear to be responding in significant number and continue to identify high prices as the number one reason for not attempting to enter.
I guess they better dive in now while interest rates are so low - because they can't get much lower, meaning borrowing money can't get much cheaper and investor-driven price rises will sooner or later nullify all the gains made by low interest rates.
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