Borrowers flock to non-major lenders through brokers

author-avatar By
on October 16, 2020
Borrowers flock to non-major lenders through brokers

Photo by Amy Hirschi on Unsplash

Non-major lenders have regained much of the market share they lost in the last six months, according to AFG brokers.

Queensland and New South Wales led the country for the non-majors, with market share increases in both states increasing by 10% and 8% respectively. 

AFG chief executive David Bailey said the non-majors' resurgence in the broker channel had been driven mostly by refinancers and upgraders. 

"After a tough six months competing against cash-back offers and competitive fixed rates from the major lenders, the non-majors have regained market share, rising from 33.2% at end of FY20 to 41.1% in FY21 Q1," Mr Bailey said.

“The major lenders’ market share dropped from 66.8% at the end of the 2020 financial year, the highest level since 2017, down to 58.9% at the close of Q1.

“This trend was most evident when looking at the majors’ share of refinances, which tumbled from a high of 71.1% at the end of the 2020 financial year to 58.1% at the close of Q1 2021."

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
UNLIMITED REDRAWSSPECIAL OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS
NSW/VIC/SA METRO & INNER REGIONAL AREAS

Variable Home Loan (Principal and Interest)

  • $5000 Cashback. T&Cs Apply.
Variable
More details
REFINANCE ONLY
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
REFINANCE ONLY

Variable Rate Home Loan – Refinance Only

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
NO ONGOING FEESFREE REDRAW FACILITY
  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.
NO ONGOING FEESFREE REDRAW FACILITY

Live-in Variable Loan (Principal and Interest) (LVR < 90%)

  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of June 26, 2022. View disclaimer.

ANZ was the biggest big four casualty of the non-majors bounceback, with its refinancing market share sliding from 25.53% to 9.67%. 

AFG also reported a significant decrease in customers who had deferred mortgage repayments as a result of financial hardship. 

"As of 8 October, the number of customers with deferral arrangements for their P&I loans has dropped from 4.34% at the close of last quarter to 0.87%," Mr Bailey said.

"In addition, 2.22% of AFG Home Loans securitized product customers have switched from P&I to Interest Only repayment arrangements.

"This is down from 4.38% at the end of FY20." 

Broker channel sees record-breaking quarter 

AFG recorded 35,400 residential home loans lodged in the first quarter of 2021 financial year, with a volume of more than $18 billion, eclipsing the previous record-breaking levels. 

"The first quarter of the 2021 financial year has seen AFG record its highest-ever lodgement volume and represents a lift of just over 8% on last quarter," Mr Bailey said.

"Against the corresponding period in FY2020 it is 16% higher."

Mr Bailey said the surge was driven mainly by first-home buyers spurred on by government incentives, with 23% of all lending applications processed for borrowers purchasing their first home. 

He said while the refinancing buzz had quietened down somewhat, many borrowers were looking to upgrade amidst the record-low interest environment. 

"Whilst remaining stable, the refinance boom evident in the months during the broader national lockdown now appear to have returned to more traditional levels, whilst upgraders have maintained a strong position in the market,” he said.

“Those who are confident in their own personal financial circumstances during the pandemic are looking for opportunities to move to a larger home."

AFG reported with tight regulations affecting rental markets, applications for investment loans had dropped to its lowest level since December 2012, at 21% of the market.

Mr Bailey said with first-home buyers flocking to brokers in droves, the national average loan size had dropped significantly. 

“The national average loan size is decidedly lower, dropping from $542,555 at the close of the last quarter to $514,532.

"This drop is largely driven by the profile of borrowers, in this case the presence of more First Home Buyers in the mix."


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

Latest Articles

author-avatar
Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

Collections:

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree
to the Savings Privacy Policy