• Michael Clarke

Competition Improvement In The Mortgage Market

Extracted from an article in Australian Broker July 2018 issue , the largest mortgage aggregation group AFG, publishes a quarterly mortgage index which reports on current events in the home mortgage lending environment. In its June 2018 issue there was noted what was termed as a ‘structural shift’ in the home lending market in terms of market share. It had always been a generally accepted view that the major Australian banks had held upwards of 80% of the home loan market in Australia. This June index revealed that the non-major bank’s market share reached a record 40.97% . Meaning of course, that the major banks share had dropped below 60%. The shift it is said by AFG, has been largely attributable to ‘’broker –driven’’ competition in the market combined with customers looking to achieve a better interest rate. Some of this movement away from the major lenders can also be attributed to the investment home lending sector where the major banks had been more heavily affected by regulatory caps put in place by the Australian Prudential Regulatory Authority (APRA). It impacted on the ‘big four banks’ in them having to raise their investment home loan rates substantially more than non-major lenders simply because of historically higher market share. That in itself has forced borrowers with investment home lending to constantly look elsewhere for both new investment lending & for refinance of existing loans. Competition is good because at the end of the day consumers benefit!