An aggregator has released its data from the month of March to illustrate how the Australian lending market has begun to feel the effects of the uncertainty caused by the COVID-19 pandemic.
The AFG Index released yesterday broke down the March activity as a subset of the usual quarterly data provided to allow for closer examination of the impact the health crisis has had on lending.
“The March quarter began with a very active property market, largely driven by record low interest rates,” said AFG CEO David Bailey.
“This has resulted in a flood of activity in March as brokers help borrowers shore up their positions against the impacts of COVID-19 and a rush to complete transactions as shutdowns loomed.”
As such, March was a record month for AFG, with almost $6.15bn in lodgements recorded.
“When looking at the quarterly data set, the third quarter is traditionally a quieter time due to the festive season break; however, lodgements were up 33% on the same period last year,” said Bailey.
This held true across the country with New South Wales up 32%, Victoria up 40%, Western Australia up 19%, South Australia up 20% and Queensland up 32% on Q3 figures from 2019.
The Index also revealed that the major banks claimed back some of their lost market share, with increasing numbers of borrowers choosing from big four brands. Major market share now sits at 60%, the highest level since 2018.
Consequently, non-majors have taken a blow, with leaders like Macquarie dropping from 11.34% to 8.78% and ING’s market share down from 3.45% to 2.48%.
The shift carries troubling connotations as choice and competitive offerings have never been more crucial to the well-being of consumers.
“With the current crisis impacting liquidity in the market it has been very pleasing to see the federal government’s swift response. The support for the non-ADI sector through its $15bn Australian Office of Financial Management (AOFM) initiatives will support competition,” said Bailey.
“When we come through the other side of the health crisis, the maintenance of competition and choice for products across a broad number of lenders is an important cornerstone of an effective lending market that Australian consumers and businesses should be able to depend upon. The AOFM’s actions will ensure that is the case.”