Leading mortgage insurer PMI has released the latest findings of the PMI Australia Market Risk Index, which showed that overall market conditions remained positive for the September quarter. The likelihood of a loss in Australia resulting from market conditions remains low.
The PMI Australia Market Risk Index provides a score of 29 for the September quarter. This is an improvement from 33 in the prior quarter and remains low compared to the long term average of 100.
The PMI Australia Market Risk Index combines a number of key market indicators which have been determined from analysis of claims' performance over 18 years to measure movements in the level of market risk associated with mortgage lending in Australia. The indicators include movement in house prices, unemployment, interest rates and GDP.
Key drivers in the recent results include:
- A small change for the September quarter 2005 which can be attributed to a strengthening outlook in Victoria - 29 this quarter, an improvement on 43 last quarter
- High energy prices which have increased the cost of production in the Australian economy
- National GDP has improved in the quarter by growing 1.3 per cent, positively contributing to both national and state index scores
- The Australian economy is prospering especially in the resources sector which is positively contributing to growth
Ian Graham, Chief Executive Officer of PMI, said that "the results from this quarter show that mortgage risk levels remain stable. The main drivers behind this trend are a strong economy, low interest rates, and strong demand for rentals that have kept vacancy rates low."
The PMI market risk index scores for the states are: NSW - 33, Victoria - 29, Queensland - 27, Australian Capital Territory - 33, South Australia - 27, Western Australia - 28, Tasmania - 32, and Northern Territory - 26.
The index provides a numerical score for each state as well as an overall national score. The scores range from 1 to 1,000 where 1 is the lowest risk and 1,000 is the highest. The long term average of the index is 100. An increase in the index score indicates possible increased risk associated with mortgage lending and similarly, a decrease in the index indicates declining risk.
The data is sourced from PMI's own database as well as from the Australian Bureau of Statistics, Real Estate Institute of Australia and the Reserve Bank of Australia.
