Property prices are expected to remain either flat or grow by up to 5% into 2013, while the Australian mortgage market is set to grow 5% according to a new report from Deloitte.

The report also suggests that a key trend is continued de-leveraging by households – in other words, people are continuing to pay off their mortgage, rather than take on additional debt. That has resulted in many staying put in their existing homes, and not following the upgrade path to bigger and more expensive houses. That’s one of the reasons why our building and construction sector is suffering its worst period in 20 years.

Related: Finally, some bank competition

The report notes that the problem for lenders is that growth in mortgages is slowing – something we here at the Motley Fool have highlighted as an issue for some time. As the report states, “The days of 10-15% per annum system growth in mortgage lending have passed and will not be returning soon”.

Deloitte also note that the banks, including the big four of Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corporation (ASX: WBC) and National Australia Bank (ASX: NAB), will need to focus retention efforts on their existing valuable customers, while focusing on efficiency and controlling costs.

That means we are likely to see lower interest rates on deposits, and banks even less likely to pass on RBA cash rate deductions in full.

It is unlikely that we will see any solution to the competitiveness between major banks, smaller banks and non-bank lenders, says the report, suggesting the big four will maintain their dominance of the mortgage market. Because of their stronger credit ratings and size, the big four can borrow at cheaper rates and in larger amounts than their smaller competitors, which will continue to maintain the divide between the two groups.

The Foolish bottom line

Based on the report findings, its seems that 2013 will be a case of ‘same-old, same-old’, with only minor changes, if any to the mortgage market in Australia. The big four will likely use their subsidiary brands, like Bank of Melbourne, Bankwest and St George to protect their main brand and margins.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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