Major banks see market share eroded
Non-major banks have seen their market share grow as tighter lending rules have caused the majors to tighten their credit criteria.
The AFG Mortgage Index for the June quarter has shown non-major-bank market share swelling to 35.2%, up from 34.4% the previous quarter and up from just 28.3% a year ago. AFG chief executive David Bailey put the result down to “significant structural change” that has caused major banks to tighten their lending policies.
“As the majors re-price their mortgages and change lending policies to meet regulatory caps, consumers are turning to mortgage brokers to get a full picture of the choices on offer in such a competitive market,” he said. “The non-major lenders are helping fill the void left by some of the majors and consumers are benefiting from the fact that a mortgage broker can offer products from those lenders without a branch network.”
Investment lending also saw a decline following rate hikes by a number of lenders. The proportion of investment loans dropped from 40% for the June quarter last year to 31% in this year’s June quarter.
Refinancing also fell, down from 35% to 29%, while average loan size fell in every state except Queensland.
“The part of the market that has been virtually untouched by regulators and lenders is the principle and interest owner category. As a result, those opting to upgrade their homes have increased from 34% to 39% in response to some attractive lending offers,” Bailey said.