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Major bank market share slips as non-major share rises

by Reporter4 minute read

The number of mortgages being sent to the major banks by brokers has fallen, according to the latest figures from the Australian Finance Group.

According to AFG’s Competition Index for March 2018, the flow of broker-originated business to the major banks (the big four and their subsidiaries) dropped from 66.14 per cent in January 2018 to 64.03 per cent by the end of February, while non-major market share jumped from 33.86 per cent to 35.97 per cent in the same period.

The Commonwealth Bank (CBA) was the only big four bank to gain market share, with its share rising marginally from 13.53 per cent to 13.63 per cent.

Despite taking a hit, Westpac’s market share remains the largest of the banks at 14.21 per cent, followed by CBA, ANZ (12.32 per cent) and NAB (7.67 per cent).

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Further, only the Westpac group of brands (Westpac, St George, Bank of Melbourne and BankSA) grew their market share over the quarter, with their market share lifting from 20.28 per cent in November 2017 to 27.05 per cent at the close of the last quarter.

AFG’s general manager of broker and residential, Mark Hewitt, attributed the Westpac Group’s market share growth to borrower uptake of fixed rate home loans.

“Interestingly, the Westpac Group’s major gain came in the area of fixed rate loans, with their share of that product type increasing from 23.63 per cent to 44.24 per cent of the market,” the GM said.

The share of investor loans written by the major banks also grew over the quarter from 64.82 per cent in November to 66.78 per cent in February.

AFG Home Loans maintained its position as the non-major lender with the largest market share (8.64 per cent), followed by AMP Bank (4.62 per cent), Macquarie Bank (4.26 per cent), ING (3.05 per cent) and Suncorp (2.81 per cent).

Over the quarter, however, AFG’s market share dropped by 1.54 per cent to 10.18 per cent, while AMP increased its share by 2.23 per cent from 2.27 per cent.

Non-majors also grew their share of the first home buyer market, rising from 31.31 per cent to 33.38 per cent over the quarter ending in February, while the major banks’ share dropped from 68.69 per cent to 66.62 per cent in the same period.

Mr Hewitt concluded: “As AFG has stated many times, a consumer dealing directly with a lender has limited negotiating power or knowledge of the interest rates and lending criteria offered by competitors. This has been further validated by the findings of the interim ACCC Residential Mortgage Price Inquiry.

“The presence of the mortgage broking channel is one of the few drivers of competitive tension in the Australian lending market.”

[Related: Fees for service would only benefit major banks: AFG] 

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