AFG Competition Index July 2013

NON-MAJOR LENDERS CLAW BACK MARKET SHARE FROM INVESTORS, REFINANCING

Non-major lenders steadily gained home loan market share back from the major banks during the second quarter of the year, according to AFG’s latest Competition Index, published today. Figures show that the overall share of loans processed for non-majors rose from 20.6% in March to 24.8% in June, while major lenders saw a corresponding fall from 79.4% to 75.2%.

Non-majors increased their collective share of the active fixed rate market during the same quarter, from 20.7% to 25.3% of all fixed rate loans.

Significantly, it is not first home buyers who are boosting the nonmajor market shares – they are traditionally the biggest buyers from non-majors. Instead, non-majors have won more business from borrowers refinancing (from 25.0% in April up to 29.6% in June) and investors (from 19.7% to 22.1%). These shifts are interesting given that existing customers are often ‘rusted on’ to their lenders and show the least inclination to move their business.

Mark Hewitt, General Manager of Sales and Operations says: ‘The latest figures are good news for competition and for borrowers, but we have to see things in context. USA has one lender for every 42,000 people. In Canada that ratio is 1 to 77,000, in UK 1 to 139,000 and in Australia 1 to 183,000. We have a long way before we start to catch up with other developed economies in terms of consumer choice.’

Turning to individual lenders, Macquarie has shown strong growth over the past few months, accounting for 5.5% of all loans in June – not far off the long term average of BankWest (which was 7.6% in June).

ING has also seen steady growth over the quarter from 2.3% to 3.7% of all home loans.

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