The Commonwealth Bank has regained a significant share of broker-originated home loans as smaller lenders struggle to keep pace with volumes.
AFG yesterday reported a surge in business heading to Australia’s biggest lender as the majors look to win back market share.
The latest AFG Competition Index shows that CBA recorded 23.4 per cent of broker-originated mortgages in February, up substantially from 18.4 per cent in January and 16.2 per cent in December.
AFG general manager of sales and operations, Mark Hewitt, said that with reports of the flow of home lending slowing, the competition for market share has intensified even further. He noted that several lenders are advertising rates of less than 4 per cent.
“The most marked increase has been the flow of business to Commonwealth Bank, which has increased its share of our flow from 17 per cent to more than 23 per cent in the last quarter,” Mr Hewitt said.
CBA subsidiary Bankwest was the other lender to record an increase in flow for the same quarter with a jump from 5 per cent to 7 per cent, giving the CBA group an overall market share of close to 31 per cent.
Mr Hewitt noted that CBA’s share of fixed rate lending for the quarter was a key driver with a jump from 13.8 per cent to 24 per cent.
All four majors reported big increases in their share of fixed rate lending apart from Westpac which initially gained share but then dropped back to finish the quarter levelled out at 9 per cent.
Leading lenders in the non-major space were ME Bank, which jumped from 1.4 per cent to 2.5 per cent of all broker-originated mortgages, and AMP, which increased market share from 1.4 per cent to 2.2 per cent.
Mr Hewitt noted that most of the larger non-majors have lost market share.
“BOQ fell from a peak of 7 per cent during the quarter to 2.5 per cent as it experienced difficulties processing the volume of loans it received,” he said.
ING Direct fell from 3.3 per cent to 1.5 per cent, Suncorp from 3.6 per cent to 2.7 per cent and Macquarie from 3.7 per cent to 3 per cent.
“When an organisation with the size and balance sheet power of Commonwealth Bank responds to competition, it can be very difficult for their smaller competitors to match them,” Mr Hewitt said.
“The broker channel is a highly effective and efficient channel for lenders to distribute their products and a competitive consumer offer is quickly taken up by brokers on behalf of their customers.”
[Related: CBA hikes business lending rates]