Powered by MOMENTUM MEDIA
subscribe to our newsletter

Big four outmuscle non-majors in mortgage space

The major banks have regained lost ground in the home lending market, consolidating their positions ahead of the economic blow dealt by the coronavirus outbreak.

The Australian Finance Group (AFG) has released its latest mortgage and competition index, which involves a survey of its network of 3,000 brokers over the three months to 31 March 2020.

The index has revealed that the major banks grew their share of home loan lodgements from 53.1 per cent in the December quarter to a two-year high of 59.6 per cent.  

In value terms, AFG brokers lodged approximately $8.8 billion in loans with the big four banks and their subsidiaries.  

Westpac Group (includes St.George Bank, Bank of Melbourne and BankSA) drove most of the improvement in major bank volumes, with its share of broker lodgements climbing from 16.3 per cent to 20.2 per cent.

Advertisement
Advertisement

ANZ and NAB’s share of lodgements also increased, rising to 9.9 per cent (up from 9.5 per cent) and 8.9 per cent (up from 8.5 per cent), respectively.

A slight decline in the Commonwealth Bank of Australia’s (CBA) share of broker lodgements, from 14.8 per cent to 14.7 per cent, was offset by an increase in its subsidiary Bankwest’s share, from 5.4 per cent to 5.7 per cent.

According to AFG CEO David Bailey, the big four banks have been better equipped to manage margin pressures from low interest rates, enabling them to outmuscle non-major competitors.

“As interest rates dropped, the major lenders saw their opportunity,” he said.

“The strength of their balance sheets, supported by their competitive funding advantage and fixed-rate offerings, has enabled them to take back some ground lost to the non-major lenders in recent times.

PROMOTED CONTENT


“All four of the major banks have been actively pursuing market share with cashback offers to customers, and it has had the desired effect, with increasing numbers of borrowers choosing from the big four stable of brands.”

Of the non-major lenders, Macquarie Bank was hit hardest by the big four’s rally over the March quarter, with its share of broker lodgements slipping for the second consecutive quarter to 8.7 per cent (down from 11.3 per cent), following four quarters of steady growth.

Citibank and ING also lost considerable ground over the March quarter, with their shares of lodgements falling to 0.3 per cent (down from 1.9 per cent) and 2.4 per cent (down from 3.4 per cent), respectively.

Suncorp Bank recorded the sharpest increase in broker share among the non-majors, up from 2.1 per cent to 2.4 per cent.  

Overall lodgements jump ahead of slump

The AFG index reported that approximately $15.4 billion in loans (29,344 applications) were lodged by brokers in the March quarter, up from $15.3 billion (28,611 applications) in the previous quarter, and from $11.6 billion (23,036 applications) in the previous corresponding period.  

The vast majority of loans were lodged in the back end of the March quarter, which Mr Bailey attributed to a “flood of activity” in response to interest rate reductions.

According to Mr Bailey, brokers were helping borrowers “shore up their positions against the impacts of COVID-19” and amid a “rush to complete transactions as shutdowns loomed”.

In the month of March alone, AFG brokers lodged $6.15 billion in loans (11,196 applications), partly driven by a spike in refinance activity, from 27 per cent of lodgements in February to 33 per cent in March.

However, analysts are expecting lending volumes to fall over the coming months, with the coronavirus outbreak arresting economic activity.

Job uncertainty and new restrictions on real estate activities are expected to hinder demand for housing credit.

Growing credit quality concerns have also prompted several lenders, particularly non-banks, to adjust their risk appetites, imposing restrictions on borrowers employed in high-risk industries.

Mortgage insurer QBE Australia has also imposed an “embargo” on the provision of lender’s mortgage industries to such borrowers.   

[Related: Banking outlook turns negative amid COVID-19 crisis]

Big four outmuscle non-majors in mortgage space
mortgagebusiness

Are you a new-to-industry broker in the process of growing your business? Then there’s some great news: The Adviser’s New Broker Academy is back in 2021 and will provide you with essential insights into cutting-edge tools, strategies and processes to fast-track to success. Don’t miss your chance to attend. To secure your FREE place, visit newbroker.com.au now!

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

Banks, mortgage brokers and lenders could receive sizeably larger bills for ASIC’s industry levies come January 2022. ...

Brisbane digital non-bank lender WLTH is set to open a $15-million capital raise, while signalling plans to drive its next scale-up phase an...

The major bank has agreed to provide a sustainability-linked loan to a Queensland beef producer in a “first” for the agriculture industr...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.