Investment lending slows as non-majors gain market share

Non-major lenders are making further headway as they compete for a greater share of the mortgage market, while investment lending slows, according to new figures from AFG.

Last month saw the aggregator process 30.9 per cent of all mortgages for non-majors – the highest it has been since the 32.5 per cent figure recorded in December 2014.

AFG’s index showed that non-majors are the strongest in winning refinancing loans (34.8 per cent of all new loans) but the weakest in competing for investors, where the major banks still dominate with 75.5 per cent of all new home loans.

The aggregator also revealed that it processed a total of $5.1 billion in mortgages for June – a 34.5 per cent increase from June 2014, and the third time this year that AFG has passed the $5 billion threshold.

AFG said that while overall mortgage figures continue to be buoyant, the June figures showed a significant decline in the proportion of investment loans – down to 36.9 per cent from a peak of 43.1 per cent in April.

The last time overall investment loans were at similar levels was in July 2013, when they comprised 35.9 per cent of all mortgage processed.

Investment loans in New South Wales dropped from 49.8 per cent in May to 41.6 per cent in June. According to AFG, the previous 12 months have seen investment loans running at an average of 49.5 per cent for the state.

The decline in investment loans was also evident in South Australia (from 41.8 per cent to 36.8 per cent), Queensland (from 36.1 per cent to 34.1 per cent), Victoria (from 36.5 per cent to 35.7 per cent) and Western Australia (from 31.8 per cent to 31.2 per cent).

AFG managing director Brett McKeon said the figures suggest that APRA’s investor lending crackdown is starting to take effect, but not at the expense of the overall mortgage market.

“If this trend continues, it should help allay concerns about overheating in Sydney, in particular, as investment levels there come back into line with the sustainable, long-term national average,” he said.

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