Lenders losing money on new mortgages

Mortgage lenders have been losing money on new home loans for first-time buyers, according to new figures from Bell Potter Securities.

The study could have far-reaching implications for the mortgage market in Australia, particularly when it comes to the availability of funding for people vying to get onto the property ladder, reports the West Australian.

According to Bell Potter Securities costs in the new-business mortgage market are exceeding revenues.

The study claimed: "Unless these factors change either via mortgage re-pricing or reduced funding costs, the banks may look to reduce the volume of mortgages they originate."

It also pointed out that the problems facing the mortgage market do not bode well for Australia's wider economy, which has been experiencing lacklustre growth.

A similar study conducted by UBS has also highlighted the cooling effect this could have on lending, particularly if wholesale mortgage products are re-valued.

The International Monetary Fund has already warned Australian banks to boost their capital reserves to safeguard against a possible housing market crash.

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