Genworth expects more housing falls
MORTGAGE lenders insurance provider Genworth says the housing market is likely to continue to moderate, as its first- half profit more than halved.
Genworth, which provides insurance to lenders against the risk of borrowers defaulting, posted a $ 41.9 million profit for the six months to June, down 52.8 per cent compared to the same period a year earlier.
On an underlying basis — which strips out one offs — net profit after tax tumbled 55.7 per cent to $ 50.3 million.
The update was delivered as new figures showed national house prices fell for the 10th consecutive month in July with Melbourne experiencing the steepest fall, according to property researcher CoreLogic.
Genworth said it expected the moderating trend in housing market conditions to continue in the second half of the year, due to pressure on lending as a result of macro- prudential measures, tightening credit standards and record levels of new housing supply coming onto the market.
“Metropolitan housing markets in Sydney and Melbourne are pre- dicted to lead the trend whilst the rate of decline in regions linked to the mining resource industry in Queensland and Western Australia, is expected to stabilise,” chief executive Georgette Nicholas said.
The company said it was making progress as it looked to evolve in the face of changing borrower and lender expectations, resulting from technology and regulatory change.
“Our first- half results are in line with our guidance and reflect the fact that 2018 will be a transitionary year as the impact of our 2017 annual premium earning pattern review is felt and we continue to implement strategic initiatives designed to redefine our core business model and diversify our revenue streams,” Ms Nicholas said.
Total portfolio delinquencies lifted 0.3 per cent to $ 7.3 million, while the portfolio delinquency rate inched up 0.03 per cent to 0.54 per cent. This was due to a decrease in the policies in force and an increase in the number of delinquencies in Western Australia, New South Wales and to a lesser extent South Australia, Genworth said.
Meanwhile, delinquencies in mining areas are showing signs of improving.