Big four market share hits all-time low

by Madison Utley24 Jan 2020

The migration away from the big banks has held strong, with the market share of the majors falling to an all-time low over the past three months, according to the most recent AFG Index. 

Property investors and first home buyers, a group which traditionally gravitates towards the majors, both helped to drive the growth. For the first time, more than half of the loans taken out by investors were secured through non-major banks, while first home buyers also "voted with their feet" with a record 36% of loans arranged with a non-major.

“Homebuyers taking out P&I loans are increasingly focused on the opportunities offered by the non-majors, with more than 45% taken out with a non-major bank, representing the highest proportion ever," said AFG CEO David Bailey. 

Non-major banks accounted for 47% of lodgements in the September quarter, the highest percentage since 2007. Macquarie Bank and Citibank were the "standout performers" among non-majors in terms of growing market share. 

That said, NAB, Westpac and CBA still continued to grow their loan books.

Notably, in the final month of the quarter, CBA and Bankwest combined received one in every three home loans in WA – half of all major lending volume in that market.

“For Westpac, it appears home borrowers put the money transfer scandal to one side after they offered $2,000 cash back and made improvements to their servicing calculator, delivering a lift from a consistent 6.5% market share for the previous five months, to 8.6% in December," Bailey added.  

The index reported a total of $15.4bn in home loan applications over the quarter, up 19% on the same period in 2018. Almost 29,000 mortgages were lodged in the three-month period, the second highest volume since 2018. First home buyers accounted for 15% – remaining at the highest level since 2013.

Bailey said, “We’re encouraged by the lending data."

"These figures show the national home loan market has consolidated the strong growth from the September quarter. We enter the new year buoyed by the healthy volumes in the second half of 2019, reinforcing the change in market sentiment during the year.

“It’s very clear that buyers have been enticed back to the market and the data is showing us that there is an incontestable trend away from the major banks. Consumers are empowered by the enhanced competition in the home loan sector generated by mortgage brokers and are reaping the benefits through greater choice and lower prices.”

While volumes were down 1.85% on the September quarter, NSW recorded 25% growth on the corresponding period in 2018, while Victoria was up 19% and Queensland and South Australia posted healthy 17% increases. Western Australia’s market may be showing signs of stabilisation with flat results quarter on quarter, but an increase of 2% on the same period in 2018.