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Mortgage demand drops, optimism still high

Despite a drop in mortgage demand, Genworth remains optimistic and relatively upbeat about the future.

According to the mortgage insurer's acting chief executive Paul Caputo, mortgage demand is, on average, down 20 per cent.

"But in the high [loan-to-value ratio] products – the market we insure – demand is down 30 per cent," Mr Caputo told The Australian Financial Review.

But even with the 30 per cent slump in demand, Mr Caputo said the company continued to perform well and expected further improvement in the second half of the year.

"[We have] improving employment and underemployment, and there's no doubt it's a better economy with good home prices," he said.

"Ignoring last month, consumer confidence is building but one negative we face is rates going up which will dampen an improvement in [the] portfolio."

Last year's historically low interest rates had helped home affordability, while the boosted first home owner's grant had lifted credit demand, leading to higher premium income for Genworth

Thursday, 27 May 2010
By: The Adviser