One of Australia’s non-major lenders has seen significant growth in broker-originated loans over the three months to December 2015.

According to the AFG Competition Index for the December quarter, Bank of Queensland (BOQ) had the highest market share of all the non-major lenders (excluding AFG Home Loans) in November with 5.2 per cent, up from 3.1 per cent in October.

BOQ’s fixed-rate mortgages continued to dominate the non-major market with 16.8 per cent market share.

In refinancing, BOQ was also the number one non-major lender, with an 8.7 per cent share of broker-originated loans in November, more than doubling the 4.1 per cent share held in October.

BOQ was also the favourite for investor loans, achieving a 9.3 per cent share of all AFG broker-originated loans in November, up significantly from the 6.1 per cent held in October.

The regional bank’s share of the investor mortgage market was also substantially greater than major lenders Bankwest (2.8 per cent), NAB (2.2 per cent) and St George Bank (7.5 per cent).

The AFG Competition Index for the last quarter of 2015 shows that non-major lenders have made up ground after a punishing few months for the challenger sector.

AFG general manager of sales and operations Mark Hewitt said the recent turnaround had been dramatic.

“We have been through a period of uncertainty and this has seen the majors use the size of their balance sheets to dominate their smaller competitors,” Mr Hewitt said.

“This quarter the tide has turned and non-majors have had their best run since June, just prior to the regulator-enforced changes to investment and interest-only lending policy being introduced.

“Over the past three months we have seen the non-majors adjust to these changes and it appears the flow of business is settling back into a more competitive pattern.”

Looking at the product categories, Mr Hewitt said the non-majors have made up ground across all lending products apart from fixed-rate home loans.

“Their share of refinancing has increased from 29.8 per cent in August to 39.5 per cent in November,” he noted.

“During the same period, investor lending has gone from 27.4 per cent of the total to 29.1 per cent, while first homeowners has leapt from 27 per cent to 32 per cent.”

However, the fixed-rate home loan figures tell a very different story. According to AFG, the non-major’s share of fixed rates fell from 45.2 per cent in August and a high of 56.8 per cent in May, to 42.5 per cent for the last quarter.

“After a three-year trend of declining use of fixed-rate loans, the tide has turned,” Mr Hewitt said.

“The corresponding increase in the major's share of fixed-rate lending has reflected that change,” he said, adding that the next edition of the AFG Mortgage Index, due for release in mid-January, will show that fixed-rate lending as a percentage of AFG’s overall business has increased from 11 per cent to 13 per cent.

“Borrower expectations that the likelihood of an interest rate rise in the New Year has many borrowers opting to fix their home loans,” said Mr Hewitt.

“Once again, the changing nature of the market means Australian borrowers are recognising more than ever the value of using a broker to help them navigate their way through.”

[Related: BOQ reveals big plans for broker channel]

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