AFG Competition Index October 2012

NON MAJORS GRAB MARKET SHARE AS BORRWERS REFINANCE

Non major lenders have seized market share from the Big Four banks and their subsidiaries over the past year, with their market share rising from 19.6% in October 2011 to 24.3% last month – an increase of 4.7%. Expressed as a proportion of the approximately $300 billion annual mortgage market, this increase in market share equates to about $14.1 billion.

Borrowers who are turning to non major lenders in greatest numbers are those seeking to refinance their home loans. In October last year, only one in five borrowers refinancing (19.4%) used a non major lender. That figure increased to 28.7% last month – nearly a 50% increase over the year.

Non major lenders have also made inroads among investors, who are traditionally the ‘stickiest’ borrowers because they tend to leverage off properties against which they have already secured financing. Non major market share among investors rose from 16.6% in October 2011 to 22.9% last month – an increase of 38%.

Mark Hewitt, General Manager of Sales and Operations says: ‘A recent Government survey showed that about 45% of people are not confident that they have the best mortgage deal. This lack of confidence is translating into refinancing which in recent months has been working to the advantage of non major lenders. Suncorp remain the dominant non major, but we’ve also seen Macquarie Bank strengthen in recent months, and ME Bank has also made rapid inroads in a very short space of time.’

Last month Suncorp had 7.1% of the overall mortgage market, but was particularly strong among first home buyers, where its share was 10.1%.

Macquarie Bank’s market share is 2.3% overall, and 3.4% among investors. And ME Bank has seized a 1.0% market share in the past five months, particularly benefiting from refinancers, where its market share was 1.5%.

AFG Competition Index – October 2012

Mortgage Index – October 2012

AFG WELCOMES RATE CUT DECISION AFTER A FLAT SEPTEMBER: LATEST MORTGAGE FIGURES

AFG, Australia’s largest mortgage broker, welcomes yesterday’s RBA rate cut after latest figures showed that mortgages processed in September were flat compared with the same month last year. AFG processed $2.7 billion of loans last month compared with $2.6 billion in September 2011.

Mark Hewitt, General Manager of Sales and Operations says: ‘We welcome the RBA decision. Both the figures and our brokers are saying that while there are some areas of confidence, things are generally very patchy. The property market has been slow to emerge from winter and whilst no one is expecting any dramatic rebounds, the interest rate cut will help.’

The AFG Mortgage Index showed that fixed rate loans reached a four year high last month on the back of aggressive competition amongst lenders.

21.5% of all new borrowers chose to lock in rates with 3 year fixed loans being particularly popular. The last time that fixed rate loans were so popular was in March 2008 when 24% of borrowers chose to lock in rates.

There was also some movement on Loan to Value Ratios – the value of home loans expressed as a percentage of property prices. LVRs have risen from 66.9% in June to 69% in September, reflecting the increase of first home buyers in the market, who tend to borrow more, and possibly an increased preparedness by other borrower types to take on greater levels of debt.

Non major banks also gained market share, from 22.2% in August to 24% in September, their highest share since December last year. While strongest among first home buyers, where they comprise over 1 in 4 new home loans, non majors also grew market share among investors and borrowers seeking to refinance.

Download – October Mortgage Index – National