Major banks claw back market share

by Julia Corderoy27 Jun 2016
Major bank market share of fixed rate mortgages has surged, now comprising over three quarters of AFG’s fixed rate market share.

According to AFG’s Competition Index, the four major banks increased their fixed rate market share by more than 13% over the past quarter – from 64.2% in March to 77.9% by the end of May 2016. This saw the non-majors share drop from 35.8% to 22.1%.

AFG general manager of sales and operations, Mark Hewitt, said ANZ was the dominant major bank force.

“ANZ fought hard to lift their share from a flat 11.3% in March and April to close out May at 20.2% of fixed rate loans,” he said.
“Suncorp was the hardest hit with its share of the fixed rate market tumbling from 20.6% in March down to 4.8% by the end of the quarter.”

However, Westpac and its subsidiaries was the standout for overall market share performance.

“The winner in the battle for overall market share between the majors for the quarter was the Westpac Group, with Westpac, Bank of Melbourne, St George and Bank SA delivering a combined 20.5% of all loans in May, up from 17.6% at the end of February,” Hewitt said.

Australia’s largest home loan lender, Commonwealth Bank, saw its total market share drop from 30.8% down to 24.5% as the quarter drew to a close.

For the non-majors, Hewitt said ING delivered a strong overall result, lifting from 1.5% to 4.3% over the quarter. But other non-majors have not done so well, with Hewitt blaming the poor results on subpar turnaround times. 

“At the other end of the scale Bank of Queensland has slid again this quarter. After riding high at 7% back in December 2015 they have dropped back significantly the past two quarters to be at 0.4% by the end of May.

“These types of significant drops are often the result of service levels blowing out. If a broker has a client that needs their home loan settled in a reasonable time frame they are not going to risk placing the business where it will be held up by slow processing times.

“We have always said that a broker’s decision on where to place the client is driven by pricing, policy and service: A home loan that has a competitive interest rate, with a lending policy that meets the client’s individual circumstances and high quality service that will ensure a smooth settlement.

“All three of these components must line up for the recommendation to go a lender’s way.”