Fixed-rate volumes plunging: AFG

The company’s network of around 3,500 brokers had lodged $21.9 billion in new home loans, up 6.9 per cent year-on-year – but down 11 per cent from the previous quarter.

AFG chief executive David Bailey commented the new year period had been marked by “strong customer demand”, but home buyers had navigated the “end of cheap money as the big banks’ Term Funding Facility came to an end”.

“As a result, fixed rate volumes have plummeted,” Mr Bailey elaborated.

“The record low interest rate environment is over and as lenders evaluate their future funding costs, they have been increasing fixed rates.”

The proportion of AFG customers choosing to fix their home loan had dropped from highs of 38.2 per cent in the September quarter to 20 per cent in the three months to March.

“This is the lowest it has been in two years,” Mr Bailey said.

Big four market share hits low for AFG

At the same time, the big four banks and their associated brands’ market share across AFG lodgements diminished from 53.5 per cent in the December quarter to 50.8 per cent by the end of March, the lowest level recorded by the aggregator.

ANZ was the only major lender to make up ground, lifting from 7.8 per cent in the December quarter to 8.7 per cent. Out of its big four rivals, NAB took the largest hit, falling by 2.6 percentage points, from 11.8 per cent in the December quarter to 9.2 per cent.

CBA slipped from 14 per cent in the previous quarter, to 12.88 per cent in the March quarter, and Westpac moved from 7.9 per cent to 7.3 per cent.

Of the non-major lenders, Macquarie made the most gains year-on-year, rising from 9.9 per cent to 11.2 per cent.

AFG Home Loans also climbed from 9.1 per cent a year prior to 10.1 per cent. Suncorp meanwhile grew from 2.6 per cent market share in the December quarter to 3.6 per cent.

However, the average loan size was down by $8,409 on the last quarter, to $615,668.

The proportion of first home buyer loans was down by 5 percentage points year-on-year, to 13 per cent of AFG mortgages lodged – although it stayed flat on the previous quarter. Mr Bailey commented the government’s recent expansion of its housing guarantee scheme will help alleviate the fall.

Investor loans remained at the same level from the prior quarter, at 26 per cent of mortgages, but the segment had crept up by 3 percentage points from the previous year.

Refinances slipped from 27 per cent of mortgages a year before and 25 per cent in the December quarter, to 24 per cent.

Meanwhile, AFG reported lenders’ average turnaround times remained consistent from the previous quarter, at 21.9 days from application submission to formal approval.

[Related: Hit to home owners should curb rate hikes: AMP]