What does the surge in home loan demand mean for your mortgage broker career?

What factors could affect the success of your mortgage broking career? It seems obvious to say the demand for home loans, but CoreLogic RP Data research from February 27 suggests that demand is at near-record highs. Starting your career on the right foot is vital to keep your business ticking along smoothly, and right now is as good a time as any to get into this burgeoning industry.

Of course, median dwelling values have increased dramatically over the past five years (throughout the current property boom) which means people will be making a major financial commitment when taking out a home loan. If you position yourself as a trusted home loan provider right now, when the market is hot, you could see great success in no time at all.

However, to do that, you’ll need to become a mortgage broker, and that’s where the team at Redrock can help.

Why are mortgages in such high demand right now?

The median dwelling value rises in Sydney and Melbourne are prompting people to make moves in the market before it becomes even more expensive to buy property in these major centres. The average rise in value since June 2012 across the capital cities in Australia is 45.3 per cent, but no cities apart from Melbourne and Sydney have seen increases greater than 21 per cent.

Sydney median dwelling values have risen by 70.5 per cent in the past five years, and Melbourne values have risen by 52.1 per cent. They currently sit at $1,093,580 and $882,750 respectively, according to the CoreLogic monthly indices to the end of February, and all the evidence points to those values rising even more.

People are anxious to get onto the property ladder (or indeed take their next step toward wealth creation through investment), so are applying for home loans before values rise further.

Where are the hottest places to be a mortgage broker?

There are two runaway winners in terms of the total value of monthly mortgage lending in the states and territories (New South Wales and Victoria), but Queensland and Western Australia aren’t as far behind as you might expect.

New South Wales monthly mortgage lending averages around $15 million, as the leader in the country. Victoria is in second with just over $9 million, while Queensland comes in third with $4 million, and Western Australia in fourth with a little over $2 million. These statistics are not surprising, as New South Wales is the biggest real estate market in Australia, followed by Victoria, followed by Queensland.

Looking at the people who are taking out these mortgages sheds some light on the current landscape in the industry. Approximately $8 million in New South Wales home loan lending goes to owner-occupiers per month, and $7 million goes to investors. Victoria is a little different, with $5.5 million going to owner-occupiers, and $3.5 million going to investors.

Clearly, investors see New South Wales (namely Sydney) as the place to be, despite the higher price tag on many properties. That doesn’t mean Victoria is a bad place to set up shop as a mortgage broker, though. The market in Sydney could be more competitive, but it could also be more lucrative. Depending on how you want to run your business, you’ll choose a suitable major centre to target.

What the overall sentiment in the real estate industry shows is that people currently want home loans, despite high dwelling values, and that both investors and owner-occupiers are competing for property. If you want to become a part of this exciting and growing industry, get in touch with the team at Redrock today for more information