Australia’s major lenders have seen their home loan market share plummet to a post-GFC low, likely due to the lending speedbumps implemented this year and increased scrutiny of the industry.
According to AFG’s latest Competition Index, the major lenders saw their share of the mortgage market dip to 62.57% in the final quarter of 2017, with ANZ losing the most ground. Its share dropped 3.5% this quarter.
By comparison, the non-majors picked up market share and now claim 37.43%, the highest this year. Non-major market share has steadily risen since December 2016 when it was 36.91%.
The majors lost ground in all categories since the last Index, including a drop of more than 3% in refinancing and more than 2% in fixed rates.
Westpac was the only group as a whole that made up any ground among the majors. It finished the quarter at 20.33%, up from 19.19% at the time of the last Index.
Macquarie was one of the non-majors that saw a rise this quarter to 4.70% from 2.91%, and AFG Home Loans saw a lift to 10.15% from 8.88%.
The Competition Index calculates loans that were written through AFG channels only. While it does not give a complete picture of the market, it does give a good indication as to where mortgage flow is strongest.
The RBA noted in its December board minutes that housing credit growth had eased in the second half of 2017 due to the major banks restraining interest-only lending to comply with APRA’s measures announced earlier in the year. While growth in lending by non-ADIs had picked up, it noted that these institutions’ share of overall housing lending remained small.
Mark Hewitt, AFG general manager, broker and residential, said the intense scrutiny the major banks have been under likely caused them to be distracted.
“With the recently announced royal commission into the banking sector, we all hope lenders can respond whilst still maintaining a focus on their customers,” Hewitt said.
The royal commission, and the industry, need to focus on how competition can be further improved and this should include the impact the government guarantee has on competition, he added.
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