The number of new Australian owner-occupier mortgages hit a 10-year low in 2010, signaling continued consumer uncertainty about the property market, new data show.

The report by independent research company Datamonitor revealed the number of mortgages for owner occupation taken out last year was the lowest since 2000, reaching 575,000 mortgages. This is a far cry from the 777,000 mortgages taken out in 2007.

“Record low housing affordability driven by higher property prices and recently raised interest rates will continue to affect the market”, said Sydney-based Petter Ingemarsson, senior analyst at Datamonitor and author of the report.

“Gradually worsening affordability has priced some prospective buyers out of the market, with younger buyers and first time buyers the most affected”, he said.

Since 2000, the average housing lending commitment has more than doubled from $133,000 to $286,000 in 2010, outstripping rises in average incomes. The widespread expectation of interest rate rises deters some prospective customers, as most economic observers expect at least one 25 basis point rise during this year.

The major banks still continue jockeying for position. Indeed, the events of the last few years have left the major Australian banks in a dominant position in the current marketplace. Smaller competitors have been sidelined, largely due to the inability to raise funds at a competitive price. The financial crisis also sparked a flow of customers seeking the perceived safety of a large bank, benefiting the majors.

“There are few short-term threats to the current major bank hegemony”, Ingemarsson said.

“The government’s measures to support mutual societies are not expected to be effective, securitization activity is still sluggish, and smaller banks may struggle to compete on price”.