Non-major banks saw a record market share in May as the major banks continue to take a hit.
The AFG Competition Index showed non-major lenders had an overall market share of new loans of 40.97%, leaving the majors continuing a five-month slide to 59%.
Among the majors Westpac and its subsidiaries Bank of Melbourne, Bank SA and St George were hardest hit, with each of their brands recording a drop in market share.
AFG general manager, broker & residential, Mark Hewitt, said, “Mortgage brokers are drivers of competition in the Australian home lending market. A consumer walking into a bank branch has a choice of a handful of products that may meet their needs.
“Consumers talking to an AFG mortgage broker have access to thousands of alternatives depending upon their individual circumstances. Many of those products are from the non-major lenders, and many of those lenders do not have a branch presence.”
The borrowers turning to non-major lenders in greatest numbers are those seeking to fix their interest rates, with market share for the non-majors in this category steadily increasing to finish the quarter at 32.57%.
ING and Suncorp were the non-major lenders of choice for fixed products, with their share of the fixed rate market sitting at 6.08% and 5.39% respectively.
Hewitt added, “The major lenders have been pulling back from the investor market to meet regulatory caps and as a result the non-majors are filling the gap in the market.
“Non-major market share among investors rose from 33.52% in February to 42.35% at the end of the quarter, an increase of 26%.”
Macquarie recorded a market share overall of 5.63%, but 8.33% in the refinancing category. Virgin Money has made rapid inroads in the short time they have been on AFG’s panel, with their share of the market in the same category rising from 0.1% to 0.86% in three months.
According to the data for first home buyers, the market share for AFG’s white label products rose across the quarter from 4.76% in February to finish at 6.3% by the end of May.
Teachers’ Mutual Bank also recorded an increase in market share among first home buyers, lifting from 2.8% to 3.14% for the quarter.
“These figures show that competition is alive and well in the Australian lending market. The continued preference by consumers for mortgage brokers and the choice they deliver over major bank branches, demonstrates that brokers are delivering the right consumer outcomes,” Hewitt said.
