Non-major market share reaches record high

by Madison Utley09 Jul 2019

The AFG Index released today not only charted the first increase in mortgage lodgements in a year, but also revealed that non-major lenders have claimed their largest market share to date.  

Over the fourth quarter of FY2019, non-majors were responsible for a record high 42% of lodgements. They also accounted for more than one-third of first home buyer mortgages, for the first time.

The data showed a 12% increase in lodgements from the last quarter, but remains 11% down as compared to the same time last year.

“There are tentative signs of increased activity with both lodgement numbers and volumes up significantly for the quarter. It will be important to see the impact of recent moves by the RBA but we remain cautiously optimistic,” said AFG CEO David Bailey.

According to Bailey, the growth shown in the investor sector – back up to 28%, the same level as the fourth quarter of 2018 – is due to the relaxation of certain regulatory constraints.

“With investor lending up, it is interesting to also note the major banks’ responses to the recent cash rate reductions where investor loan rates have seen larger rate cuts passed on to customers. With those APRA-related restrictions now lifted, this could signal a new battleground for customers,” he noted.

In the fourth quarter, a record 35% of all first home buyer lodgements went to the non-majors, the highest share since the 33% recorded in the second quarter of 2015. Additionally, the non-majors recorded close to 45% of all interest-only home loans, up by around 5% from the same time last year.

The market share of the majors and non-majors was separated by less than 8% in New South Wales. The divide was the greatest in the Northern Territory at 45.5%. 

While recent focus has been on variable rates following the consecutive RBA cuts of the last two months, Bailey noted that some consumers seem to be “calling the bottom” of the market and gravitating back towards locking current offerings in.  

“Almost 37% of customers choosing a fixed rate loan were doing so with a non-major lender. This is a high for the year – this number in March 2019 was only 20%. Of the fixed rate loan providers in the market, the Westpac house of brands provide one in every four fixed rate loans which, incredibly, is down from nearly 38% in April,” explained Bailey. 

Other notable highlights from the index are Macquarie’s market share growth through the quarter, which saw the non-major wrap up the financial year just shy of 10%, as well as ING regaining ground and finishing at 4%, up from under 2% in March.

CBA increased market share to 18% and NAB reached 7%, while Westpac, Bank SA, Bank of Melbourne and St George all recorded a fall in market share.