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‘Structural shift’: Big four losing broker business

‘Structural shift’: Big four losing broker business

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James Mitchell Comments 9
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Australia’s challenger banks are seeing a greater share of third-party mortgages as the big four continue to lose their stranglehold of the home loan market.

The latest AFG Competition Index released this week shows further evidence of what the major aggregator is calling a “structural shift in the Australian lending market”, as non-major lenders again seize market share from the big four.

Non-major lenders have seen their overall market share of new loans hit a record 40.97 per cent in May 2018.

“The major lenders’ share of new business is declining, with their overall market share continuing a five-month slide to be sitting at 59 per cent at the end of last month,” AFG general manager, broker & residential, Mark Hewitt said.

AFG noted that Westpac and its subsidiaries Bank of Melbourne, Bank SA and St. George have been hit the hardest, with each of their brands recording a fall in market share.

The borrowers turning to non-major lenders in greatest numbers are those seeking to fix their interest rates, with market share for the non-majors in this category steadily increasing to finish the quarter at 32.57 per cent, Mr Hewitt said.

“ING and Suncorp are the non-major lenders of choice for fixed products, with their share of the fixed rate market sitting at 6.08 per cent and 5.39 per cent, respectively.”

The major lenders have been pulling back from the investor market to meet regulatory caps, and as a result, the non-majors are filling the gap in the market, Mr Hewitt said.

The AFG Competition Index shows that the non-major market share among investors rose from 33.52 per cent in February to 42.35 per cent at the end of the quarter — an increase of 26 per cent.

“Macquarie is proving popular with those looking to refinance, recording a market share overall of 5.63 per cent but 8.33 per cent in the refinancing category,” Mr Hewitt said.

“Virgin Money has made rapid inroads in the short time they have been on AFG’s panel, with their share of the market in the same category rising from 0.1 [of a percentage point] to 0.86 [of a percentage point] in three months.

“First home buyers looking for a simple, low-cost mortgage product have found it in AFG Home Loans, with market share for AFG’s white label products rising across the quarter for this category from 4.76 per cent in February to finish at 6.3 per cent by the end of May.”

Teachers’ Mutual Bank also recorded an increase in market share among first home buyers, lifting from 2.8 per cent to 3.14 per cent for the quarter.

Mr Hewitt concluded: “These figures show that competition is alive and well in the Australian lending market. The continued preference by consumers for mortgage brokers and the choice they deliver over major bank branches demonstrates that brokers are delivering the right consumer outcomes.”

[Related: Major brokerage to overhaul remuneration structure]

‘Structural shift’: Big four losing broker business
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James Mitchell

James Mitchell

James Mitchell has over eight years’ experience as a financial reporter and is the managing editor of mortgages at Momentum Media. He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, SMSF Adviser, Smart Property Investment, Residential Property Manager and Real Estate Business.

He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group. James holds a BA (Hons) in English Literature and an MA in Journalism.

James is also the editor of Wellness Daily.

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