With the positive affordability and buyer confidence from the last months of 2020, the year started strongly in terms of buying and selling activities. 

With mortgage rates having fallen by over 1% and incomes have increased by over 6% since 2017, there is significant capacity for buyers to push up home prices, as reported in various predictions and mortgage assessments conducted by financial institutions.

The industry will likely be further boosted as the economy recovers from the effects brought upon by the COVID-19 pandemic.

A lot of factors have contributed to the positive outlook in the mortgage industry; from the federal government’s intervention by injecting a series of financial stimulus, lower interest rates, to increased household savings, all these factors have enabled a positive housing sentiment in the country.

In an article released by spglobal,“In the three months ended December 2020, residential mortgages with a loan-to-value ratio of at least 95% increased 27.4% from a year earlier, although this segment remained the smallest portion of the sector’s mortgage book, according to the Australian Prudential Regulation Authority. The year-over-year increase was much higher than the 15.4% growth for mortgages with an LTV ratio of between 60% and 80%, as well as the 9.7% growth for home loans with an LTV ratio of below 60%, according to the regulator’s quarterly report on bank statistics released March 16.”

It has been noted though that the increase in homebuyer borrowing can be contributed to the JobKeeper program which ended on the 28th of March. With this, experts say that those who borrowed in November 2020 may be placed at risk, given that it could potentially trigger unemployment.

Experts, however, do not see it as a cause for alarm as the impact could be cushioned by the improving market sentiments and recovery of the labor market.