The home loan market contracted significantly over the last quarter and is projected to contract further next year, according to an independent report.
The Market Intelligence Strategy Centre (MISC) report found the value of all new home loans written fell by 5.9 per cent in the September quarter and is expected to fall by a further $14.4 billion, or 8.8 per cent, over the next 12 months to September 2010.
An MISC spokesman said if the market declines by $14.4 billion as predicted, it would be the biggest fall since 2003, when the value of all new home loans written contracted by about $35 billion.
“MISC believes this quarter will see the lowest point in new mortgage demand for the 2010 year and that June and September quarters will show positive growth, albeit still far less than 2009 experience," an MISC spokesperson said.
"The bottom of the market will not be reached till the March 2010 quarter," the report said
Australian Finance Group’s general manager Mark Hewitt supported the report’s findings, telling The Australian Financial Review that mortgage market growth was likely to fall back from an average of 9 per cent annually to 4 per cent this financial year.
The report contrasts with the findings of JP Morgan’s industry report in October, which predicted mortgage market growth at rates between 6 per cent and 7 per cent between now and 2011.