The Mortgage And Property Industries And The Gfc

Australians have a dream of owning their own homes and the generally move house about every eight years. The fact that Aussies like to own their own homes combined with the fact that their interest rate payments are not deductible mean that they like to build up equity in their homes. There are lots of parties involved in the Australian property market including banks, non-bank lenders, and mortgage brokers.

This can all be combined with the fact that capital gains tax is not charged on owner occupied property in Australia, making it an attractive investment vehicle for building personal wealth.

In recent years, the rental market has fallen behind demand. Landlords have seen their rental profits decline, although the capital returns on property have been fairly good during the same time period. When the share market lost two thirds of its value in the 2007-8 crash, and prominent banks and finance companies with exposure to the US market failed, the Australian property market retreated to its 2005 value - which was still a fairly good increase over its 2000 value.

The typical Australian borrower earns approximately $49,000 per year. Dual-income households earn about $76,000 and the average mortgage size is $225,000. Around 70% of Australians and owner occupiers. About two thirds of these live in the major cities. That leaves a large portion of the population renting, and combined with population growth through immigration of about 115,000 people per year, the rental market is being stretched.

As long as home-ownership is such an elusive goal for Australians, people wanting strong fixed-interest returns will invest in mortgages and there will be independent sources of funds available for borrowers.

Investing in mortgage funds has always been popular in Australia, usually through law firms and solicitors’ mortgage funds. The interest rates charged to borrowers by these funds is usually quite high as the borrowers have little choice but to use the funds as a lender.

This is now being supported by Government policy in Australia. According to Treasurer Swann’s speech, recent Government initiative has helped five non-major Australian banks, four building societies and credit unions, and four non-ADI lenders to raise over $10. 4 billion in funding. This supported competition in the mortgage sector at a time when the private securitisation market had collapsed and the global financial crisis brought banking systems around the world to their knees.

The Government's investments in Residential Mortgage Backed Securities has enabled smaller lenders to lend at competitive rates of interest and maintain a higher level of lending and market share than would otherwise have been possible. This in turn will help mortgage brokers who need non-bank lenders to survive.

By: marktc

Article Directory: http://www.articledashboard.com

Your local firm of Mortgage Brokers are standing by to help you with your next home loan at www.moneynet.com.au/. Contact us today. www.moneynet.com.au/