AFG Competition Index – June 2016

Majors the victors with fixed rates the weapon of choice

The majors have made their move in a bid to squeeze out their competitors with a targeted push for fixed rate market share.

After a soft start in March with 64.2% of the fixed rate market, the major lenders pushed hard to lift their share to 77.9% by the end of May 2016. This saw the non-majors share drop from 35.8% to 22.1% as the quarter drew to a close.

Mark Hewitt, AFG General Manager of Sales and Operations noted ANZ was the dominant player in this game. “ANZ fought hard to lift their share from a flat 11.3% in March and April to close out May at 20.2% of fixed rate loans.”

“Suncorp was the hardest hit with its share of the fixed rate market tumbling from 20.6% in March down to 4.8% by the end of the quarter,” he said.

“The winner in the battle for overall market share between the majors for the quarter was the Westpac Group, with Westpac, Bank of Melbourne, St George and Bank SA delivering a combined 20.5% of all loans in May, up from 17.6% at the end of February.

“This win has helped them make up ground to close in on the CBA stable with the CBA and Bankwest total dropping from 30.8% down to 24.5% as the quarter drew to a close.

For the non-majors, ING delivered a strong result lifting from 1.5% to 4.3% over the quarter.

“At the other end of the scale Bank of Queensland has slid again this quarter. After riding high at 7% back in December 2015 they have dropped back significantly the past two quarters to be at 0.4% by the end of May.

“These types of significant drops are often the result of service levels blowing out. If a broker has a client that needs their home loan settled in a reasonable time frame they are not going to risk placing the business where it will be held up by slow processing times,” he said.

“We have always said that a broker’s decision on where to place the client is driven by pricing, policy and service: A home loan that has a competitive interest rate, with a lending policy that meets the client’s individual circumstances and high quality service that will ensure a smooth settlement.

“All three of these components must line up for the recommendation to go a lender’s way.”

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