Industry nears significant milestone

by Madison Utley14 Oct 2019

Recent data released by an aggregator not only charted record lodgements over the last three months, but revealed how near the industry is drawing to a milestone that was “unheard of” just years ago.

The AFG Index showed non-major banks accounted for 45.9% of lodgements over the September quarter.

“From the perspective of loan volumes, we are now approaching a 50-50 split between the majors and non-majors. Something unheard of as little as five years ago,” said Australian Finance Group (AFG) CEO, David Bailey.

“Consumers are continuing to express a desire to seek out competitive offers. First home buyers, upgraders and mortgage holders refinancing have driven the market share of the non-major banks.

“This represents a fundamental shift in the dynamic between lenders. Consumers are sending a very clear message that they want the choice and the transparency of a competitive home loan market in Australia and mortgage brokers are delivering.”

Macquarie and AMP led the non-majors in taking business away from the larger banks, with both lenders having more than doubled their market share in the past 12 months.

AFG charted $15.7bn in over 29,000 lodgements in the three months to 30 September 2019, with volumes up 21% on the previous quarter and 11% on the corresponding period last year.

The AFG Index corroborated the most recent ABS data showing first home buyers have been particularly active over the last few months, accounting for 15% of mortgages over the period – the highest level in seven years.

The low interest rate environment has also contributed to record numbers of borrowers looking to pay down debt through a P&I loan. During the September quarter, 82% of loans were P&I – the highest proportion in the history of the AFG Index.

“We have seen a significant change in the home loan market recently,” said Bailey.

“The shift in sentiment is encouraging. With the impact of further cuts by the RBA yet to flow through the market, we anticipate the improved affordability will see positive momentum continue through to the end of the year and into 2020.

“Best-ever quarters in NSW and Victoria - buoyed by these record low interest rates, a rebound in the Sydney and Melbourne markets and changes to lending criteria – have fuelled the recovery in national numbers.”