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
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME 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%
LIMITED TIME 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%
VariableMore details
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
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
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 18, 2021. 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 which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

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.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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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.

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