The Deloitte Australian Mortgage Report, with its centrepiece being a roundtable drawing out the views of mortgage industry heads of lending and mortgage broker leaders, shows that this year the sector is far less bullish in its growth outlook than in previous years.The predictions for the Australian mortgage market in 2017 are again influenced by availability and affordability, and the effects of international instability and increased regulation.James Hickey, Deloitte financial service partner and co-author of the Mortgage Report, said total new lending to households remained flat over 2016. "Over the 12 months to December 2016, total new lending, including refinancing, was flat at $384 billion," he said."This was the first year since 2012 that settlements did not grow."The Deloitte view emerged that this was due to:•    APRA's sound lending benchmark of ten per cent new annual growth to investors, which reduced lending to investors in 2015 and the first half of 2016 (although it has is grown since the second half of 2016) ;•    more stringent serviceability criteria, especially around non regular and offshore income sources, and borrowers' capacity to repay in times of higher interest rates;•    greater pricing for risk, particularly for higher loan to value ratio lending, investor lending and interest only repayments; and •    more selective lending, including reduced participation in certain parts of the market, such as lending to property developments or off the plan.Hickey said it was important to draw a distinction between 'affordable housing' and 'housing affordability'. "While affordable housing is vitally important in assisting households of lower socio economic standing be able to have appropriate housing, it is housing affordability that is often discussed around the inability of otherwise financially able households to afford property, especially in the Sydney and Melbourne property markets," he observed. "However, there is more to Australia than just those markets. Across the other states and regional areas of NSW and Victoria, the affordability issue is quite different. It is not so much property prices, but rather employment and availability of jobs and certainty of income which is the concern.  "This creates a dilemma for regulators and policy setters in that any lever to dampen demand in Sydney and Melbourne may have unintended consequences on other capital cities and regional areas," Hickey said. "There is also a whole area to be explored around the greater release of existing supply particularly if retirees are encouraged to downsize without any adverse impact on their pension eligibility. They could also be further incentivised by not having to pay stamp duty on their repurchase," he said. The other big topic, one that is more perennial than a prediction, is that of funding for lenders, and the expectation that banks balance sheets are "unquestionably strong".Graham Mott, Deloitte financial services partner and funding practice leader, said: "Most Australians may struggle to understand why a change in the cash rate does not correlate to an exact change in mortgage rates. Pricing of mortgages is far more of an art than most of the public are aware.  "Banks have an