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AFG Competition Index October 2013

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

Non-major lenders doubled their share of new fixed rate loans between March and September this year, according to AFG, Australia’s largest mortgage broker. The latest AFG Competition Index shows that non-major lenders accounted for 15.5% of fixed rate loans in March 2013, but this figure rose to 29.2% during September.

Fixed rates spearheaded a broader-based increase in market share by non-majors, who accounted for 26.3% of all new home loans at the end of September, compared with 24.5% in June and 20.6% in March this year.

Mark Hewitt, General Manager of Sales and Operations says: ‘Competition in the mortgage market is as strong as it has ever been, and it’s the non-major lenders who have been fuelling this. They are continuing to put pressure on major lenders, who have been compelled to respond. This has resulted in unprecedented levels of discounting with the clear winner being the borrower.’

Across different buyer categories, non-majors made strongest headway among borrowers looking to refinance, increasing their share from 29.6% of the market in June, to 33.1% in September. This trend may well be related to the increase in fixed rate loans, with borrowers looking to refinance able to secure competitive deals from non-major lenders.

Major lenders are still by far the greatest beneficiaries of current high levels of investor activity, with a 76% market share, although this is somewhat down from 79.9% in March. Non-major lenders further grew their penetration of the first home buyer market, which has traditionally been their greatest support base, from 25.6% in June to 26.8% in September.

ING took the lead among non-majors for fixed interest products, achieving an 8.2% market share in this category during September – and a double-digit 11.0% in July. Macquarie Bank accounted for 10% of refinancing deals in September, consolidating its sustained growth this year. Suncorp continues to show strength across all buyer categories.

AFG Competition Index – October 2013

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