Regional's FHB grab comes at a risk

by Adam Smith23 May 2012

A regional lender is outdoing three of the four majors for share of the first homebuyer market, but could be increasing the risk profile of their portfolio.

New figures from AFG show that Suncorp has beaten out ANZ, Westpac and NAB in its share of the first homebuyer market. The regional bank has seen the biggest gains in first homebuyer market share of any lender over the past year, taking 14.8% of the market last month and peaking at 17.4% in February.

But the increase in first homebuyer loans could put pressure on Suncorp's mortgage portfolio, AFG said.

"This approach is likely to have placed pressure on the risk profile of their book, and it has been noticeable of late that Suncorp have taken steps to address this by focusing heavily on their offer for sub 80% LVR lending," the company said.

While Suncorp may have beaten out three of the big four, Commonwealth Bank remained the lender of choice for first homebuyers. CBA took a 22.9% share of the market in April. But AFG general manager of sales and operations Mark Hewitt said the success of Suncorp showed a shift in mindset among first time buyers.

"These dynamics are significant for the mortgage market of the future. First home buyers are a very important part of the overall market, both because they create momentum up the property chain and also because their attitudes signal future trends. Today's generation of first home buyers are very willing to look outside the majors for their mortgage needs. This is good news for competition going forward," he said.

Indeed, non-major lenders have seen an increase in first homebuyer market share over the past. Lenders outside the majors averaged around 22-23% market share 12 months ago, but AFG figures indicate non-majors now average 28-29% market share among first homebuyers.

Refinancers also showed an increasing propensity to look outside the big four. Non-majors averaged around 20% of the refinancing market 12 months ago, compared to around 25% over the past three months.

Related stories:

Aggregators to banks: Time to share the wealth

'Clear divide' in mortgage demand as sales head north