Alarming statistics warn of major domination

According to the latest AFG Mortgage Index, Australia’s major lenders have made “significant inroads” into the first home buyer segment and are now responsible for writing nearly four out of every five new home loans.

The index shows the proportion of loans processed for non-major lenders in the first home buyer market fell to 21.8 per cent in February, from 24.8 per cent in the month before.

Non-major lenders have traditionally been stronger in the first home buyer sector than with other types of borrower, such as investors, upgraders and people seeking refinance.

The non-majors’ share of the first home buyer market hit a high of 33 per cent in May 2012.

AFG’s general manager of sales and operations, Mark Hewitt, said the Australian mortgage market has been less competitive than those of other developed economies for a very long time.

“So it’s of real concern to see the growing dominance of the majors in the only part of the market where there used to be stronger competition. We hope this is something the ACCC take into account in their current deliberations,” he said.

Despite the recent data, however, Australia’s non-major lenders remain resolute and optimistic about the year ahead.

ME Bank said the lender would continue to build on the momentum it created last year and would hopefully increase its share of the mortgage market.

“2012 was a good year for us because we were able to build our brand in the marketplace and we hope to build off that success in 2013,” a spokesperson said.

“We react to what our customers say and believe we have a lot to offer that other lenders cannot.”