The newly released AFG Mortgage Index provides “stark evidence” that the lending environment has “significantly deteriorated” according to the group’s CEO, who went so far as to say the data should be “a wake-up call for policymakers.”
The Index showed that lending volumes in the first three months of 2019 dropped 10% from the previous quarter, with volumes in the March quarter 15% lower year on year.
Both the number and volume of loans lodged during the quarter were the lowest in over five years.
According to AFG CEO David Bailey, “We have reached a critical time in the housing market cycle and we would urge policymakers to tread carefully in any regulatory responses flowing from the royal commission. This is a time for policy formulation that considers the full potential impact on the lending market.
“It is clear the broader implications for the Australian economy are huge if we get it wrong.”
The tight lending market and falling housing prices have contributed to a decline in NSW volumes of almost 20% quarter on quarter. All other states, with the exception of the Northern Territory, are also significantly lower than the same time last year.
While many of the figures are grim, the Index did highlight the crucial contribution of the broking industry.
Bailey explained, “The value mortgage brokers deliver by facilitating a competitive lending environment is most starkly shown by the ongoing decline in the market share of the major banks, which peaked in Q3 of 2013 at 78.2%.”
That figure now rests at 58.6%.
Bailey continued, “Outside of the mortgage broking channel, the majors have control and dominate the market. The distribution capability provided by mortgage brokers enables the country’s non-major lenders to compete.
“With the sole exception of first home buyers, who remain the last bastion of major bank lending, the growth in non-major lending has been broadly uniform across all other customer types.”
The Index revealed that the “big losers” of the past six months have been ANZ and NAB, with the latter’s share halving and now sitting at 5%.
Among the “winners” are Westpac and its affiliated brands, as well as Western-Australia based Bankwest.