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."
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Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
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."
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): Credit Union Australia, 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.
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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