Wholesale Banking Performance Analysis

Characteristics of the Australian Mortgage Market ▸ Solid population growth combined with an insufficient expansion in Australia's dwelling stock has led to a broad-based undersupply of housing in most locations ▸ The latest NAB Australian Property Survey indicates that overall demand for existing property improved slightly in the March quarter. Resident owner occupiers continue to dominate the market for existing properties - with investors shying away in the more difficult economic climate - although there was a small decrease in first home buyer activity in the first quarter of 2012. Access to credit, employment security and interest rate uncertainty continue to be the biggest impediments to demand side housing credit growth ▸ Around 80% of Australian mortgages are at variable rates, making the most common mortgage rate very sensitive to changes in monetary policy Ratio of Dwellings to Resident Population State average = 100 Index Index Queensland New South Wales Western Australia 102 102 100 Victoria 98 96 100 South Australia 98 Tasmania 96 1996 2002 2009 2000 2006 Sources: ABS; NAB Most common mortgage interest rates % Australian standard variable rate 8 6 US 30-year fixed interest rate 2 % 8 6 2 117 0 0 2001 2005 2009 Sources: RBA; US Federal Reserve National Australia Bank

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