Supermarkets flagged as biggest mortgage disruptor

Mortgage insurer Genworth’s annual survey of the Australian mortgage market has revealed supermarkets as the largest potential disruptor to the industry.

In last year’s research, lenders felt that online operators and superannuation funds were most likely to have the largest impact on the market, Genworth chief commercial officer Bridget Sakr said.

“In 2014 we have seen a change in this situation, with 37 per cent of lenders now believing that market entry by supermarket groups would most likely have the largest impact on the market while at the same time downgrading the potential influence of online competitors and superannuation funds,” Ms Sakr said.

In April, Mortgage Business reported that supermarket giant Coles was considering a move into mortgage broking after hiring a third-party specialist.

In the UK, Tesco Bank is reportedly eyeing the broker channel after launching a suite of mortgage products in 2012.

The Genworth survey found that while the overall health of the market was seen as good, the findings suggested that FHBs comprise 10.5 per cent of all lender originated loans and 18.9 per cent of all broker originated loans, supporting arguments that FHBs are finding it increasingly difficult to enter the housing market.

Australia is one of the few markets to successfully utilise the broker distribution model and 61 per cent of participants expect the broker channel to continue growing in volume over the next five years, compared to 52 per cent in 2013, the report found.

The research also suggested that first home buyers are almost twice as likely to apply for a mortgage through an intermediary rather than directly through a lender.

Meanwhile, there was almost universal support that the cash rate is at the appropriate setting. The cash rate, lender funding mix, and government policy were identified as the most influential drivers of mortgage market health.

“Lenders and brokers agreed that APRA’s current regulatory position strikes the right balance between responsible lending and access to housing credit,” Ms Sakr said.

“They also believe that current levels of consumer debt are not a cause for concern,” she said.

“While it is acknowledged that rate rises or a correction in property prices could change this assessment, industry experts predict stable interest rates over the next year and believe that factors such as population growth and supply constraints may put a floor underneath property prices over the short term.”

Surveyed consumers were the group most concerned about consumer housing debt, with 36 per cent believing that it was a cause for concern.

The 2014 Home Grown: Mortgage Industry Perspectives Report involved over 1,200 consumers and industry professionals.

 

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