First time buyers could be hit by lending drought
Australians looking to get onto the property ladder could be hit by a drought in mortgage finance, according to a new report from UBS Securities.
The firm claims that there has been a steady rise in wholesale funding costs and as a result the banks are lending less to first-time buyers.
UBS said that many of the country's financial institutions are in a "dangerous" place and will be reluctant to lend to new buyers – particularly after a number of losses made on new mortgage products over the last few months.
The finding comes shortly after the Housing Industry Association noted that the number of home loans issued by banks fell in December of last year.
Speaking to the Sydney Morning Herald about the bleak mortgage outlook for first-time buyers, Jonathan Mott, a banking analyst at UBS, said: "We estimate the banks are currently losing money on new mortgages written in the current funding environment."
He added that the banks will need to re-price their mortgage products or the implications for the wider market will be significant.
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